The Company has accumulated New Hampshire net operating losses. The New Hampshire tax
benefit of the cumulative net operating loss is approximately $1.1 million which begins to
expire in 2022, and is included in deferred income taxes in the Consolidated Balance Sheet as
of December 31, 2018.
As of December 31, 2018 and 2017, 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, 2018 and 2017, the Company had New Hampshire Business Enterprise
Tax (“NHBET”) credits of approximately $997,000 and $853,000, respectively. NHBET
credits begin to expire in 2019. 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 increased by $144,000 and $126,000 in the years ended
December 31, 2018 and 2017, 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 $9,943,000
and $9,955,000 as of December 31, 2018 and 2017, 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 in a filed tax return, or
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 2018 and
2017. We incurred no penalties during the years ended December 31, 2018 and 2017,
respectively.
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