Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
 9 Months Ended
Sep. 30, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The components of income tax expense (benefit) attributable to the Partnership for the nine months ended September 30, 2016 and 2015, are as follows:
 
 
Nine Months Ended September 30,
 
 
 
2016
 
2015
 
U.S. current income tax expense (benefit)
 
$
31,352

 
$
27,164

 
U.S. deferred income tax (benefit) expense
 
29,110

 
(5,916,716
)
 
Foreign current income tax expense (benefit)
 
2,652,847

 
3,310,118

 
Foreign deferred income tax (benefit) expense
 
26,387

 
(98,073
)
 
Total
 
$
2,739,696

 
$
(2,677,507
)
 


In recording deferred income tax assets, the Partnership considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the Partnership’s ability to generate future taxable income during the periods in which those deferred income tax assets would be deductible. The Partnership considers the scheduled reversal of deferred income tax liabilities and projected future taxable income for this determination. The Partnership determined that no valuation allowance was required at September 30, 2016 and 2015. Foreign tax credits may be applied for up to five years. Tax credits as of September 30, 2016 must be utilized by September 30, 2021.

The Partnership is classified as a partnership for income tax purposes. Accordingly, income taxes on net earnings were payable by members and are not reflected in historical financial statements except for taxes associated with a taxable subsidiary. Pro forma adjustments are reflected to provide for income taxes in accordance with ASC 740. For unaudited pro forma income tax calculations, a statutory Federal tax rate of 35% and actual state “as if” rates were used for the pro forma enacted tax rate. The pro forma tax effects are based upon currently available information and assume the Company had been a taxable entity in the periods presented. Management believes that these assumptions provide a reasonable basis for presenting the pro forma effects. Based on estimates of the temporary differences as of September 30, 2016, upon conversion to a taxable entity, net deferred income tax liabilities of approximately $53.1 million will be recognized with a corresponding charge to earnings. This charge has not been reflected in the pro forma adjustments.