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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 03/07/2018
Entire Document
 

Effective Tax Rate

The income tax provision differed from the amounts computed by applying the statutory U.S. federal income tax rate of 35% to loss before income taxes, as follows:
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Income tax benefit at U.S. federal statutory rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
Increase (reduction) in income taxes:
 
 
 
 
 
 
State income taxes, net of U.S. federal benefit
 
4.0

 
(5.9
)
 
1.0

Foreign operations
 
8.7

 
(1.5
)
 
9.9

Non-controlling interest
 
(9.4
)
 
(15.9
)
 
(20.6
)
Goodwill impairment
 

 
(6.2
)
 

Stock-based compensation
 

 

 
(2.2
)
Tax Act rate change impact
 
2.0

 

 

Change in valuation allowance
 
(34.1
)
 
(4.7
)
 
(17.7
)
Other
 
2.8

 
(1.0
)
 
0.6

Effective tax rate
 
9.0
 %
 
(0.2
)%
 
6.0
 %
        
Prior to the consummation of the Merger on October 16, 2017, TerraForm Power owned approximately 66% of Terra LLC and SunEdison owned approximately 34% of Terra LLC. On October 16, 2017, pursuant to the Settlement Agreement, SunEdison transferred its interest in Terra LLC to TerraForm Power. As a result of this transaction, TerraForm Power now owns 100% of the capital and profits interest in Terra LLC, except for the IDRs which are owned by Brookfield IDR Holder.

Terraform Power consolidates the results of Terra LLC through its controlling interest. Prior to the consummation of the Merger, it recorded SunEdison's ownership of Terra LLC as a non-controlling interest in the financial statements. Terra LLC is treated as a partnership for income tax purposes. As such, the Company recorded income tax on its share of Terra LLC's taxable income and SunEdison recorded income tax on its share of Terra LLC's taxable income in accordance with the applicable ownership percentages before and after the Merger on October 16, 2017.

For the year ended December 31, 2017, the overall effective tax rate was different than the statutory rate of 35% primarily due to loss allocated to the recording of a valuation allowance on certain tax benefits attributed to the Company, loss
allocated to non-controlling interests, the revaluation of deferred federal and state tax balances and the effect of foreign and state taxes. For the year ended December 31, 2016, the overall effective tax rate was different than the statutory rate of 35% primarily due to loss allocated to the recording of a valuation allowance on certain tax benefits attributed to the Company, loss allocated to non-controlling interests, the impairment of goodwill at Capital Dynamics and the effect of state taxes. For the year ended December 31, 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to the recording of a valuation allowance on certain tax benefits attributed to the Company, loss allocated to non-controlling interests and due to the application of the intraperiod allocation rules, resulting in a significant tax provision recorded in other comprehensive income. As of December 31, 2017 and 2016, most jurisdictions were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets primarily because of the history of losses in those jurisdictions.



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