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, 2020

Note 11. Income Taxes

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act contains significant changes to corporate taxes, including a permanent reduction of the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s statutory rate for the fiscal year ended September 30, 2018 was 24.5%, based on a fiscal year blended rate calculation. The 21% U.S. corporate tax rate is fully applicable to the fiscal year ended September 30, 2019 and each year thereafter.

The Act required a one-time remeasurement of certain tax related assets and liabilities. During the first quarter ended December 31, 2017, the Company made certain estimates related to the impact of the Act including the remeasurement of deferred taxes at the new expected tax rate and a revised effective tax rate for the year ended September 30, 2018. For the fiscal year ended September 30, 2018, the Company recorded a tax benefit of approximately $9,847,000 to account for these deferred tax impacts.

In October 2019, the Internal Revenue Service concluded their audit of the September 30, 2015 tax year with no changes. The Federal and State filings remain subject to examination by tax authorities for tax periods ending after September 30, 2015.

The income tax provision for the years ended September 30, 2020, 2019 and 2018 consists of the following:

(in thousands)	Fiscal Year Ended September 30,
	2020			2019		2018
Current:
Federal income tax	$	131		$	7,314	$	1,961
State income tax		(71	)		2,202		384
Total current		60			9,516		2,345

Deferred:
Federal income tax		6,151			2,995		(3,917	)
State income tax		1,452			272		1,962
Total deferred		7,603			3,267		(1,955	)
Income tax provision	$	7,663		$	12,783	$	390

Income tax provision attributable to income before income taxes differed from the amount computed by applying the statutory federal income tax rate of 21%, 21% and 24.53% to income before income taxes for the fiscal years ended September 30, 2020, September 30, 2019 and September 30, 2018, respectively, as a result of the following:

(in thousands)	Fiscal Year Ended September 30,
	2020			2019		2018
Income tax at the statutory federal rate	$	6,568		$	10,587	$	3,198
Increase (decrease) resulting from:
State income taxes, net of federal benefit		1,217			1,947		857
Permanent and other reconciling items, net		170			166		221
Expiration of capital loss carryforward		—			—		5,634
Reduction in deferred tax liability resulting from the Act		—			—		(9,847	)
State rate change		(156	)		—		—
Stock option cancellation		—			—		347
Other		(136	)		83		(20	)
Income tax provision	$	7,663		$	12,783	$	390

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, 2020, and 2019 are presented below:

(in thousands)	September 30,
	2020			2019
Deferred tax assets:
Deferred retirement benefits	$	—		$	1,325
Goodwill		16,304			18,244
Inventories		813			930
Stock compensation		314			237
Intangibles		508			565
Other		203			168
Total deferred tax assets		18,142			21,469

Deferred tax liabilities:
Property and equipment		56,707			52,551
Investment in Citree		1,016			909
Prepaid insurance		147			134
Total deferred tax liabilities		57,870			53,594
Net deferred income tax liabilities	$	(39,728	)	$	(32,125	)

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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