Note 9 — Income Taxes
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly
referred to as the Tax Cuts and Jobs Act (the TCJA). The TCJA makes broad and compiex
changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal
corporate tax rate from 35 percent to 21 percent; (2) elimination of the corporate alternative
minimum tax (AMT) and changing how existing AMT credits can be realized; (3) changing
rules related to usage and limitation of net operating loss carryforwards created in tax years
beginning after December 31, 2017; (4) changing rules related to limitation of interest expense
deductions; and (5) the taxation of CIAC as income for Regulated Water Utilities, due to the
elimination of an exemption allowed prior to the TCJA. Certain of the 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 was for the year ended December 31, 2017, even though
the effective date of most provisions of the TCJA is January 1, 2018.
At December 31, 2017, 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 2017 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,
2018 and 2017 were as follows:
(in thousands) 2018 2017
Federal $ 913 $ 1,057
State 812 84
Amortization of investment tax credits (33) (33)
Total $ 1,692 $ 1,108
Current $ 518 $ -
Deferred 1,174 1,108
Total $ 1,692 $ 1,108
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