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, 2017

The provision (benefit) for income tax for the years ended September 30, 2017, 2016 and 2015 consists of the following:



(in thousands)	Fiscal Year Ended September 30,
	2017			2016		2015
Current:
Federal income tax	$	102		$	244	$	(1,348	)
State income tax	—			—		(98		)
Total current	102			244		(1,446		)
Deferred:
Federal income tax	(3,286		)	4,538		10,432
State income tax	(662		)	739		1,919
Total deferred	(3,948		)	5,277		12,351
Total provision (benefit) for income taxes	$	(3,846	)	$	5,521	$	10,905

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,
	2017			2016			2015
Tax at the statutory federal rate	$	(4,670	)	$	4,382		$	9,335
Increase (decrease) resulting from:
State income taxes, net of federal benefit	(402		)	457			1,279
Permanent and other reconciling items, net	548			773			280
Expiration of capital loss carryover	581			—			—
Other	97			(91		)	11
Total provision (benefit) for income taxes	$	(3,846	)	$	5,521		$	10,905

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, 2017, and 2016 are presented below:



(in thousands)	September 30,
	2017			2016
Deferred tax assets:
Deferred retirement benefits	$	1,712		$	1,620
Inventories	6,435			912
Alico-Agri, Ltd. outside basis differences	—			474
Goodwill	33,233			36,217
Deferred gain recognition	10,601			10,964
Capital loss carryforwards	9,462			9,702
Alternative minimum tax credits	293			197
Net operating losses	3,160			5,844
Intangibles	1,027			763
Other	158			3
Total deferred tax assets	66,081			66,696

Deferred tax liabilities:
Revenue recognized from citrus and sugarcane	—			282
Property and equipment	91,995			95,149
Accrual-to-cash method	950			1,908
Prepaid insurance	220			331
Investment in Magnolia	24			82
Total deferred tax liabilities	93,189			97,752
Net deferred income tax liability	$	(27,108	)	$	(31,056	)

As of September 30, 2017, the Company has approximately $8,000,000 federal and approximately $10,100,000 state income tax net operating loss (NOL) carryforwards. The Federal NOL's of approximately $3,600,000 will expire in 2024 and approximately $4,400,000 in 2025. The State NOL’s of approximately $3,600,000 will expire in 2024 and approximately $6,500,000 in 2025. As of September 30, 2017, the Company has approximately $24,600,000 of capital losses, which will expire 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, has not provided a valuation allowance on the deferred tax assets related to these NOL and capital loss carryforwards.