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Income taxes
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9 Months Ended |
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Jun. 30, 2012
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| Income taxes [Abstract] | |
| Income taxes |
Note 5. Income taxes
Alico's effective tax rate was 38.1% and 38.5% for the nine months ended June 30, 2012 and 2011, respectively.
The Company applies a "more likely than not" threshold to the recognition and non-recognition of tax positions. A change in judgment related to prior years' tax positions is recognized in the quarter of such change. The Company had no reserve for uncertain tax positions as of June 30, 2012 and September 30, 2011. The Company recognizes interest and/or penalties related to income tax matters in income tax expense and in the income tax payable accounts.
The Internal Revenue Service ("IRS") examined the returns of Alico, Agri-Insurance Company, Ltd. ("Agri-Insurance," a former subsidiary of Alico liquidated in September 2010) and Alico-Agri for the tax years 2005 through 2007. The Company contested issues raised by the IRS during the examinations and pursued resolution through the IRS Appeals process. On May 16, 2012, the Company finalized an agreement to settle all outstanding issues. Federal taxes due as a result of the settlement totaled $613,000 and have been paid in full. Federal interest due as a result of the settlement is approximately $225,000. All Federal penalties were waived. State tax, penalties and interest due as a result of the settlement are estimated at approximately $435,000. See Note 12. Subsequent Events. |