In the Tax Cuts and Jobs Act (the Tax Act”) was enacted. The Tax Act significantly revised the U.S. corporate income tax regime by, among other things, the following items:

 

 

The sources of income before income taxes for the Successor period from through the predecessor period from through and for the fiscal year ended are as follows:

 

		Successor				Predecessor
(in thousands)		December 6, 2018 through October 31, 2019				November 1, 2018 through December 5, 2018				Year Ended October 31, 2018
United States		$	(14,875	)		$	(26,975	)		$	15,077
Foreign			1,660				207				3,521
Total		$	(13,215	)		$	(26,768	)		$	18,598

 

The components of the provision for income taxes for the Successor period from through the predecessor period from through and for the fiscal year ended are as follows:

 

		Successor				Predecessor
(in thousands)		December 6, 2018 through October 31, 2019				November 1, 2018 through December 5, 2018				Year Ended October 31, 2018
Current tax provision:
Federal		$	-			$	-			$	(366	)
Foreign			1,108				134				1,232
State and local			409				31				456
Total current tax provision			1,517				165				1,322
Deferred tax provision (benefit):
Federal			(3,317	)			(3,474	)			(10,649	)
Foreign			(571	)			(86	)			(730	)
State and local			(932	)			(797	)			273
Total deferred tax (benefit) provision			(4,820	)			(4,357	)			(11,106	)
Net provision (benefit) for income taxes		$	(3,303	)		$	(4,192	)		$	(9,784	)

 

For the Successor period from through the predecessor period from through and for the fiscal year ended the income tax provision differs from the expected tax provision computed by applying the U.S. federal statutory rate to income before taxes as a result of the following:

 

		Successor				Predecessor
(in thousands)		December 6, 2018 through October 31, 2019				November 1, 2018 through December 5, 2018				Year Ended October 31, 2018
Income tax provision per federal statutory rate of 21%, 21% and 23%		$	(2,777	)		$	(5,622	)		$	4,310
State income taxes, net of federal deduction			(468	)			(635	)			560
Foreign rate differential			(48	)			(6	)			(179	)
Meals and entertainment			187				24				220
Transaction costs			18				1,414				44
Change in deferred tax rate			(95	)			30				-
Stock-based compensation			-				6				65
Contingent consideration fair value adjustment			-				-				122
Equity contribution			127				-				-
Nontaxable interest income net of foreign income inclusions			(257	)			(62	)			40
Deferred tax on undistributed foreign earnings			236				68				(142	)
Impact of tax reform			-				-				(14,645	)
Deferred finance costs			-				586				-
Fuel tax credit			103				-				-
Return to prior year provision			(323	)			-				(173	)
Other			(6	)			5				(6	)
Income tax provision		$	(3,303	)		$	(4,192	)		$	(9,784	)

 

The tax effects of the temporary differences giving rise to the Company’s net deferred tax liabilities for the Successor at and the Predecessor at are summarized as follows:

 

		Successor				Predecessor
(in thousands)		Year Ended October 31, 2019				Year Ended October 31, 2018
Deferred tax assets:
Accrued insurance reserve		$	1,334			$	942
Accrued sales and use tax			77				962
Accrued payroll			353				368
Foreign tax credit carryforward			80				80
Interest expense carryforward			9,181				-
Stock-based compensation			893				-
Prepaid expenses			4				-
Other			435				1,931
Net operating loss carryforward			17,385				255
Total deferred tax assets		$	29,742			$	4,538
Valuation allowance			(63	)			(63	)
Net deferred tax assets			29,679				4,475
Deferred tax liabilities:
Intangible assets			(36,593	)			(6,219	)
Property and equipment			(61,608	)			(36,394	)
Prepaid expenses			-				(120	)
Unremitted foreign earnings			(527	)			(747	)
Total net deferred tax liabilities			(98,728	)			(43,480	)
Net deferred tax liabilities		$	(69,049	)		$	(39,005	)

 

The Company has federal net operating loss carry forwards of million, million, and million as of and respectively, that begin to expire in The Company has state net operating loss carry forwards of approximately million, million, and million as of and respectively, that begin to expire in

 

The Company has foreign tax credit carryforwards of approximately million as of and respectively, that begin to expire in

 

The Company has provided U.S. deferred taxes on cumulative earnings of all of its non-U.S. subsidiaries.

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carryback opportunities, and tax planning strategies in making the assessment. The Company believes it is more likely than that it will realize the benefits of these deductible differences, net of the valuation allowance provided. The valuation allowance provided by the Company relates to foreign tax credit carry forwards.

 

As a result of the Tax Act, the Company recorded a tax benefit of million for the period ended related to the remeasurement of deferred tax assets and liabilities to reflect the reduction in the U.S. corporate income tax rate from percent to percent. The Company also recorded a tax expense of million for the period ended related to the deemed repatriation of earnings from its foreign subsidiaries, also known as the “Transition Tax”. The net of these adjustments related to the Tax Act reflect the total impact of tax reform for the period ended

 

The Tax Act limits, for certain entities, the deduction for net interest expense to the sum of business interest income plus  of adjusted taxable income. Adjusted taxable income is defined in the Tax Act Reform Legislation similar to earnings before interest, taxes, depreciation and amortization for taxable years beginning after and before and is defined similar to earnings before interest and taxes for taxable years beginning after The Company has non-deductible interest for tax purposes of million and million for the year ended and the period ended respectively.  The disallowed interest expense can be carried forward indefinitely, but will continue to be subject to limitation.

 

The following table summarizes the changes in the Company's unrecognized tax benefits during the Successor period from through the Predecessor period from through and the fiscal year ended The Company expects material changes to unrecognized tax positions within the next months. If recognized, of these benefits would favorably impact the Company's income tax expense, before consideration of any related valuation allowance:

 

		Successor				Predecessor
(in thousands)		December 6, 2018 through October 31, 2019				November 1, 2018 through December 5, 2018				Year Ended October 31, 2018
Balance, beginning of year		$	-			$	-			$	-
Increase in current year position			1,726				-				-
Increase in prior year position			-				-				-
Decrease in prior year position			-				-				-
Lapse in statute of limitations			-				-				-
Balance, end of year		$	1,726			$	-			$	-

 

For the Successor period from through the Predecessor period from through and the fiscal year ended the Company has recognized interest or penalties.