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, 2013

Note 12. Income Taxes

The provision for income taxes (benefit) for the years ended September 30, 2013, 2012 and 2011 consists of the following:

(in thousands)	Fiscal Year Ended September 30,
	2013		2012		2011

Current:
Federal income tax	$	2,508	$	3,696	$	4,141
State income tax		458		1,298		726

Total current		2,966		4,994		4,867


Deferred:
Federal income tax		7,921		5,617		608
State income tax		1,142		362		(45	)

Total deferred		9,063		5,979		563

Total provision for income taxes	$	12,029	$	10,973	$	5,430

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,
	2013			2012			2011

Tax at the statutory federal rate	$	11,086		$	10,312		$	4,259
Increase (decrease) resulting from:
State income taxes, net of federal benefit		1,067			1,051			460
Federal impacts from IRS exam and tax return amendments		19			(444	)		713
Deferred rate adjustment		-			(313	)		-
Permanent and other reconciling items, net		(143	)		367			(2	)

Total provision for income taxes	$	12,029		$	10,973		$	5,430

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, 2013 and 2012 are presented below:

(in thousands)	September 30,
	2013			2012

Deferred tax assets:
Deferred retirement benefits	$	1,686		$	1,581
Inventories		144			144
Restricted stock compensation		31			-
Alico-Agri, Ltd. outside basis differences		3,196			20,857
Capital loss carry forward		10,502			1,037
Other		159			357

Total deferred tax assets		15,718			23,976

Deferred tax liabilities:
Revenue recognized from citrus and sugarcane		302			286
Property and Equipment		21,550			20,826
Investment in Magnolia		450			385

Total deferred tax liabilities		22,302			21,497

Net deferred income tax (liability) asset	$	(6,584	)	$	2,479

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, 2013 or 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.

On May 16, 2012, the Company reached a settlement with the IRS related to its examination of the returns of Alico, Agri-Insurance, Ltd., (a former subsidiary of the Company) and Alico-Agri for the tax years 2005 through 2007. As a result of the settlement, the Company paid Federal taxes of $613,000 and interest of $225,000. On October 9, 2012, the Company paid the State of Florida $318,000 for taxes and $5,000 for interest as a result of the IRS settlement. The Company accrued $149,000 at September 30, 2012, for additional state interest and penalties. The actual amount paid was $135,000 for state interest. No amount was due for state penalties, and the remaining accrual was reversed during the second quarter of fiscal year 2013.

- 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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