Alico, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes

12 Months Ended

Sep. 30, 2016

The provision for income tax for the years ended September 30, 2016, 2015 and 2014 consists of the following:



(in thousands)	Fiscal Year Ended September 30,
	2016		2015			2014
Current:
Federal income tax	$	244	$	(1,348	)	$	4,035
State income tax	—		(98		)	543
Total current	244		(1,446		)	4,578
Deferred:
Federal income tax	4,538		10,432			6,160
State income tax	739		1,919			645
Total deferred	5,277		12,351			6,805
Total provision for income taxes	$	5,521	$	10,905		$	11,383

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:



(in thousands)	Fiscal Year Ended September 30,
	2016			2015		2014
Tax at the statutory federal rate	$	4,382		$	9,335	$	8,117
Increase (decrease) resulting from:
State income taxes, net of federal benefit	457			1,279		183
Permanent and other reconciling items, net	773			280		3,083
Other	(91		)	11		—
Total provision for income taxes	$	5,521		$	10,905	$	11,383

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, 2016, and 2015 are presented below:



(in thousands)	September 30,
	2016			2015
Deferred tax assets:
Deferred retirement benefits	$	1,620		$	1,595
Inventories	912			230
Alico-Agri, Ltd. outside basis differences	474			467
Goodwill	36,217			39,081
Deferred gain recognition	10,964			11,234
Capital loss carry forward	9,702			12,804
Alternative minimum tax credits	197			—
Net operating loss	5,844			7,141
Other	765			200
Total deferred tax assets	66,695			72,752

Deferred tax liabilities:
Revenue recognized from citrus and sugarcane	282			223
Property and equipment	95,149			93,849
Accrual-to-cash method	1,908			3,905
Prepaid insurance	331			256
Investment in Magnolia	82			299
Total deferred tax liabilities	97,752			98,532
Net deferred income tax liability	$	(31,057	)	$	(25,780	)

Deferred taxes are included in the accompanying Consolidated and Combined Balance Sheets are as follows:



(in thousands)	September 30,
	2016		2015

Deferred tax liabilities, current	$	53	$	151
Deferred tax liabilities, non-current	31,004		25,629
Total deferred tax liabilities	$	31,057	$	25,780

As of September 30, 2016, the Company has approximately $14,800,000 federal and approximately $18,300,000 state income tax net operating loss (NOL) carryforwards. The Federal NOL's of approximately $4,200,000 will expire in 2024 and approximately $10,600,000 in 2025. The State NOL’s of approximately $4,200,000 will expire in 2024 and approximately $14,100,000 in 2025. As of September 30, 2016, the Company has approximately $25,200,000 federal and state capital loss carryforwards, with approximately $600,000 expiring in 2017 and approximately $24,600,000 in 2018. The Company believes that it is more likely than not that the benefit from federal and state NOL and capital loss carryforwards will be realized and therefore have not provided a valuation allowance on the deferred tax assets related to these NOL and capital loss carryforwards.