We had a federal net operating loss in 2015 and 2014 in the amounts of approximately $3.5
and $1.8 million, respectively. The federal tax benefit of the cumulative net operating loss is
approximately $3.3 million which begins to expire in 2032, and is included in deferred
income taxes in the Consolidated Balance Sheet as of December 31, 2015.
We had a New Hampshire net operating loss in 2015 and 2014 in the amounts of
approximately $4.4 million and $2.9 million, respectively. The New Hampshire tax benefit of
the cumulative net operating loss is approximately $500,000 which begins to expire in 2022,
and is included in deferred income taxes in the Consolidated Balance Sheet as of December
31, 2015.
As of December 31, 2015 and 2014, we estimated approximately $476,000 and $476,000 of
cumulative federal alternative minimum tax credits that may be carried forward indefinitely
as a credit against our regular tax liability.
As of December 31, 2015 and 2014, we had New Hampshire Business Enterprise Tax
(“NHBET”) credits of approximately $369,000 and $369,000, respectively. NHBET credits
begin to expire in 2017. We anticipate that we will not fully utilize these NHBET credits
before they expire; therefore, we have recorded a valuation allowance related to these credits.
The valuation allowance increased by $369,000 in the year ended December 31, 2015.
Investment tax credits resulting from utility plant additions are deferred and amortized. The
unamortized investment tax credits are being amortized through the year 2033.
We had a regulatory liability related to income taxes of approximately $781,000 and
$803,000 as of December 31, 2015 and 2014, 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.
We made a review of our portfolio of uncertain tax positions. In this regard, an uncertain tax
position represents our 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, we determined that we
had no material uncertain tax positions. We will use tax planning strategies, if required, and
when possible, to avoid the expiration of any future net operating loss and/or tax credits.
We file income tax returns in the U.S. federal jurisdiction, the State of New Hampshire, and
the Commonwealth of Massachusetts. Our 2011 through 2014 tax years remain subject to
examination by the Internal Revenue Service. Our tax year 2009 was audited by the Internal
Revenue Service and the year was closed with no changes. Our 2009 through 2014 tax years
remain subject to examination by one or more state jurisdictions.
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