tax years beginning after December 31, 2017; and (4) changing rules related to limitation of
interest expense deductions. Certain of TCJA’s provisions require interpretation, which may
be clarified through issuances of guidance by the U.S. Treasury Department, regulations, or
future technical corrections.
FASB ASC 740 requires companies to recognize the effects of tax law changes in the period
of enactment, which for the Company is for the year ended December 31, 2017, even though
the effective date of most provisions of TCJA is January 1, 2018.
The Company’s revaluation of federal deferred tax balances to reflect the 21% corporate
income tax rate resulted in a one-time, non-cash expense of approximately $2,500,000,
included in the Company’s provision for income taxes, offset by an increase in deferred
income tax liabilities.
The components of the federal and state income tax provision (benefit) as of December 31,
2017 and 2016 were as follows:
(in thousands) 2017 2016
Federal $ 1,057 $ 284
State 84 (116)
Amortization of investment tax credits (33) (33)
Total $ 1,108 $ 135
Current $ - $ -
Deferred 1,108 135
Total $ 1,108 $ 135
The following is a reconciliation between the statutory federal income tax rate and the
effective income tax rate for 2017 and 2016:
2017 2016
Statutory federal rate 34.0% 34.0%
State tax rate, net of federal benefits 6.2% 5.4%
Permanent differences -15.8% -54.8%
Tax rate change -45.8% 0.0%
Amortization of investment tax credits 0.6% 3.0%
Effective tax rate -20.8% -12.4%
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