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, 2018

The provision (benefit) for income tax for the years ended September 30, 2018, 2017 and 2016 consists of the following:



(in thousands)	Fiscal Year Ended September 30,
	2018			2017			2016
Current:
Federal income tax	$	1,961		$	102		$	244
State income tax	384			—			—
Total current	2,345			102			244

Deferred:
Federal income tax	(3,917		)	(3,286		)	4,538
State income tax	1,962			(662		)	739
Total deferred	(1,955		)	(3,948		)	5,277
Provision (benefit) for income taxes	$	390		$	(3,846	)	$	5,521

Income tax provision (benefit) attributable to income from continuing operations differed from the amount computed by applying the statutory federal income tax rate of 24.53%, based on a blended rate calculation, to income (loss) before income taxes for the fiscal year ended September 30, 2018 and 35% for the fiscal years ended September 30, 2017 and 2016 as a result of the following:



(in thousands)	Fiscal Year Ended September 30,
	2018			2017			2016
Tax at the statutory federal rate	$	3,198		$	(4,670	)	$	4,382
Increase (decrease) resulting from:
State income taxes, net of federal benefit	857			(402		)	457
Permanent and other reconciling items, net	221			548			773
Expiration of capital loss carryforward	5,634			581			—
Reduction in deferred tax liability resulting from the Act	(9,847		)	—			—
Stock option cancellation	347			—			—
Other	(20		)	97			(91		)
Provision (benefit) for income taxes	$	390		$	(3,846	)	$	5,521

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, 2018, and 2017 are presented below:



(in thousands)	September 30,
	2018			2017
Deferred tax assets:
Deferred retirement benefits	$	1,114		$	1,712
Investment in Citree	89			45
Deferred gain recognition	6,318			10,199
Goodwill	20,095			33,233
Inventories	711			6,435
Stock compensation	261			292
Accrued bonus	612			248
Capital loss carryforwards	—			9,462
Tax credits	28			293
Net operating losses	—			3,160
Intangibles	620			1,027
Other	190			332
Total deferred tax assets	30,038			66,438

Deferred tax liabilities:
Revenue recognized from citrus and sugarcane	162			357
Property and equipment	54,925			91,995
Accrual-to-cash method	—			950
Prepaid insurance	104			220
Investment in Magnolia	—			24
Total deferred tax liabilities	55,191			93,546
Net deferred income tax liabilities	$	(25,153	)	$	(27,108	)

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 fiscal year ended September 30, 2018 was 24.53%, based on a fiscal year blended rate calculation. The 21% U.S. corporate tax rate will apply to fiscal years ending September 30, 2019 and each year thereafter.

Additionally, the Act requires a one-time remeasurement of certain tax related assets and liabilities. During the first fiscal 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 fiscal year ended September 30, 2018. The amounts recorded for the fiscal year ended September 30, 2018 for the remeasurement of deferred taxes principally relate to the reduction in the U.S. corporate income tax rate. For the fiscal year ended September 30, 2018, the Company has recorded a tax benefit of approximately $9,847,000 to account for these deferred tax impacts.