The Company has accumulated New Hampshire net operating losses. The New Hampshire tax
benefit of the cumulative net operating loss is approximately $1.4 million which begins to
expire in 2023 and is included in deferred income taxes in the Consolidated Balance Sheet as
of December 31, 2020.
As of December 31, 2020 and 2019, it is estimated that approximately $476,000 and
$476,000, respectively, of cumulative federal alternative minimum tax credits may be carried
forward indefinitely as a credit against our regular tax liability.
As of December 31, 2020 and 2019, the Company had New Hampshire Business Enterprise
Tax (“NHBET”) credits of approximately $960,000 and $1.1 million, respectively. NHBET
credits begin to expire in 2021. It is anticipated that these NHBET credits will not be fully
utilized before they expire; therefore, a valuation allowance has been recorded related to
these credits. The valuation allowance decreased by approximately $167,000 and increased
by approximately $126,000 in the years ended December 31, 2020 and 2019, respectively.
Investment tax credits resulting from utility plant additions are deferred and amortized. The
unamortized investment tax credits are being amortized through the year 2033.
The Company had a regulatory liability related to income taxes of approximately $9,918,000
and $9,930,000 as of December 31, 2020 and 2019, respectively. This represents the
estimated future reduction in revenues associated with deferred taxes which were collected
at rates higher than the currently enacted rates and the amortization of deferred investment
tax credits.
A review of the portfolio of uncertain tax positions was performed. In this regard, an
uncertain tax position represents the expected treatment of a tax position taken ina filed tax
return, or as planned to be taken in a future tax return, that has not been reflected in
measuring income tax expense for financial reporting purposes. As a result of this review, it
was determined that the Company had no material uncertain tax positions, and tax planning
strategies will be used, if required and when possible, to avoid the expiration of any future
net operating loss and/or tax credits.
The Company’s practice is to recognize interest and/or penalties related to income tax
matters in “Other, Net” in the Consolidated Statements of Income. We incurred no interest
in 2020 and 2019. We incurred no penalties during the years ended December 31, 2020 and
2019.
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