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SEC Filings

10-K
TERRAFORM GLOBAL, INC. filed this Form 10-K on 06/15/2017
Entire Document
 

expected to result in U.S. tax deductions in the future. To the extent a foreign jurisdiction recognizes a tax benefit, that benefit is generally expected to result in an increase to U.S. taxable income in the future.
As of December 31, 2016, the Company owns 64.9% of Global LLC and consolidates the results of Global LLC through its controlling interest. The Company records SunEdison’s 35.1% ownership of Global LLC as a non-controlling interest in the financial statements. Global LLC is treated as a partnership for income tax purposes. As such, the Company records income tax on its 64.9% of Global LLC’s taxable income and SunEdison records income tax on its 35.1% share of taxable income generated by Global LLC.
For the year ended December 31, 2016, the overall effective tax rate was different than the statutory rate of 35.0% primarily due to change in valuation allowances in the Company's U.S. and foreign jurisdictions, imputed interest in the Netherlands, the impact of tax holidays as well as losses allocable to non-controlling interests. For the year ended December 31, 2016, the Company decreased its valuation allowance by $20.8 million, of which $20.6 million was recorded to continuing operations and $0.2 million was recorded to the balance sheet. In addition, the Company allocates taxes to its minority owner, of which $0.9 million was allocated for the year ended December 31, 2016.
Deferred Taxes
The tax effects of the major items recorded as deferred tax assets and liabilities are:
 
As of December 31,
(In thousands)
2016
 
2015
Deferred tax assets:
 
 
 
Net operating loss carryforwards
$
129,404

 
$
99,724

Asset retirement obligations

 
685

Derivatives
14,434

 
16,464

Unrealized currency loss

 
822

Investment in Partnership
180,054

 
214,799

Other
2,300

 
2,134

Total deferred tax assets
326,192

 
334,628

Valuation allowance
(240,678
)
 
(261,501
)
Net deferred tax assets
85,514

 
73,127

 
 
 
 
Deferred tax liabilities:
 
 
 
Power plants
(83,594
)
 
(64,973
)
Intangible assets
(20,042
)
 
(18,320
)
Capitalized Interest

 
(1,011
)
Unrealized currency gain
(13,139
)
 
(17,463
)
Total deferred tax liabilities
(116,775
)
 
(101,767
)



 


Net deferred tax liabilities
$
(31,261
)
 
$
(28,640
)
The Company regularly reviews its deferred tax assets for realizability, taking into consideration all available evidence, both positive and negative, including cumulative losses, projected future pre-tax and taxable income (losses), the expected timing of the reversals of existing temporary differences and the expected impact of tax planning strategies. The Company’s total deferred tax liabilities, net of deferred tax assets, as of December 31, 2016 and December 31, 2015 were $31.3 million and $28.6 million, respectively.
As of December 31, 2016, the Company's most significant asset for which deferred taxes are being provided is its basis in the Global LLC partnership interest. The underlying solar generation facilities are controlled under Global LLC, and thus deferred tax assets and liabilities at the Company's project portfolio companies are captured within the deferred tax asset for investment in partnership. As of December 31, 2016, the Company has gross net operating loss carryforwards of $150.5 million in the United States and $367.4 million in multiple foreign jurisdictions that will expire beginning in 2036 and 2016, respectively. The Company believes that it is more likely than not that it will not generate sufficient taxable income to realize


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