Annual report pursuant to section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Sep. 30, 2012
Income Taxes [Abstract]  
Income Taxes

Note 12. Income Taxes

The provision for income taxes (benefit) for the years ended September 30, 2012, 2011 and 2010 consists of the following:

 

             
(dollars in thousands)  

Fiscal year ended September 30
   

2012

 

  

2011

 

  

2010

 
Current:                        
Federal income tax   $ 3,696     $ 4,141     $ (74 )
State income tax     1,298       726       (869 )
                         
Total     4,994       4,867       (943 )
                         
Deferred:                        
Federal income tax     5,617       608       (901 )
State income tax     362       (45 )     643  
                         
Total     5,979       563       (258 )
                         
Total provision (benefit) for income taxes   $ 10,973     $ 5,430     $ (1,201 )
                         

Income tax provision (benefit) attributable to income from continuing operations differed from the amount computed by applying the statutory federal income tax rate of 35% to pre-tax income as a result of the following:

 

             
(dollars in thousands)  

Fiscal year ended September 30
   

2012

 

  

2011

 

  

2010

 
Tax at the statutory federal rate   $ 10,312     $ 4,259     $ (620 )
Increase (decrease) resulting from:                        
State income taxes, net of federal benefit     1,051       460       (66 )
Nontaxable interest and dividends     -       -       (37 )
Federal impacts from IRS exam and tax return amendments     (444 )     713       404  
Deferred rate adjustment     (313 )     -       -  
Change in valuation allowance     -       -       (569 )
Permanent and other reconciling items, net     367       (2 )     (313 )
                         
Total provision (benefit from) for income taxes   $ 10,973     $ 5,430     $ (1,201 )
                         

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of September 30, 2012 and 2011 are presented below:

 

         
(dollars in thousands)  

2012

 

  

2011

 
Deferred tax assets:                
Contribution carry forward   $ -     $ 112  
Deferred retirement benefits     1,581       1,471  
Inventories     144       159  
Restricted stock compensation     -       44  
Investment in Alico-Agri, Ltd.     20,857       23,677  
Capital loss carry forward     1,037       72  
Other     357       139  
                 
Total deferred tax assets     23,976       25,674  
                 
                 
Deferred tax liabilities:                
Revenue recognized from citrus and sugarcane     286       72  
Property and equipment     20,826       16,753  
Investment in Magnolia     385       366  
                 
Total gross deferred tax liabilities     21,497       17,191  
                 
Net deferred income tax asset   $ 2,479     $ 8,483  
                 

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 at September 30, 2012. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense and in the liability for uncertain tax positions.

The IRS examined the returns of Alico, Agri-Insurance 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, we finalized an agreement to settle all outstanding issues. All Federal penalties were waived. Federal taxes and interest paid to the IRS as a result of the settlement totaled $613,000 and $225,000, respectively. On October 9, 2012, the Company paid the State of Florida $323,000 for taxes and interest as a result of the IRS settlement. The payment included $318,000 for taxes and $5,000 for interest. The Company has additional pending state interest and penalties totaling $149,000 outstanding as a result of the final settlement amount which were accrued at September 30, 2012. See Note 18. Subsequent Events.