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INCOME TAXES | 12 Months Ended
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Sep. 30, 2014
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES A reconciliation of the U.S. federal statutory rate of 35 percent to the effective rate from operations for the fiscal years ended September 30, 2014, 2013 and 2012 is as follows:
(Thousands) | 2014 | 2013 | 2012
Statutory income tax expense | $ | 67,834 |  | $ | 52,661 |  | $ | 35,213 |
Change resulting from |  |  |
State income taxes | 7,785 |  | 5,168 |  | 5,434 |
Depreciation and cost of removal | (4,437 | ) | (5,769 | ) | (3,999 | )
Investment tax credits | (23,083 | ) | (18,749 | ) | (34,397 | )
Basis adjustment of solar assets due to ITC | 3,959 |  | 3,225 |  | 5,974 |
Other | (218 | ) | (961 | ) | (496 | )
Income tax provision | $ | 51,840 |  | $ | 35,575 |  | $ | 7,729 |
Effective income tax rate | 26.8 | % | 23.6 | % | 7.7 | %
The income tax provision (benefit) from operations consists of the following:
(Thousands) | 2014 | 2013 | 2012
Current |  |  |
Federal | $ | 37,904 |  | $ | 12,248 |  | $ | 14,983 |
State | 11,096 |  | 1,763 |  | 4,025 |
Deferred |  |  |
Federal | 24,963 |  | 34,127 |  | 18,757 |
State | 960 |  | 6,186 |  | 4,361 |
Investment tax credits | (23,083 | ) | (18,749 | ) | (34,397 | )
Income tax provision | $ | 51,840 |  | $ | 35,575 |  | $ | 7,729 |
The temporary differences, which give rise to deferred tax assets and (liabilities), consist of the following:
(Thousands) | 2014 |  | 2013
Deferred tax assets |  |  |
Investment tax credits | $ | 10,341 |  | (1) | $ | 43,033 |
Deferred service contract revenue | 3,299 |  |  | 3,231 |
Incentive compensation | 14,632 |  |  | 6,798 |
Fair value of derivatives | 14,350 |  |  | — |
State net operating losses | 8,962 |  |  | 6,118 |
Conservation incentive plan | 2,312 |  |  | — |
Other | 10,078 |  |  | 5,718 |
Total deferred tax assets | $ | 63,974 |  |  | $ | 64,898 |
Deferred tax liabilities |  |  |
Property related items | $ | (371,017 | ) |  | $ | (329,921 | )
Remediation costs | (12,429 | ) |  | (18,881 | )
Equity investments | (35,474 | ) |  | (33,368 | )
Post employment benefits | (10,268 | ) |  | (17,455 | )
Fair value of derivatives | — |  |  | (6,258 | )
Conservation incentive plan | — |  |  | (7,611 | )
Under-recovered gas costs | (5,056 | ) |  | (383 | )
Other | (11,751 | ) |  | (13,699 | )
Total deferred tax liabilities | $ | (445,995 | ) |  | $ | (427,576 | )
Total net deferred tax liabilities | $ | (382,021 | ) |  | $ | (362,678 | )
(1) Includes $2.8 million for NJNG, which is being amortized over the life of the related assets and $7.5 million for NJRCEV, which is ITC carryforward. The Company and one or more of its subsidiaries files or expects to file income and/or franchise tax returns in the U.S. Federal jurisdiction and in the states of New Jersey, New York, Connecticut, Texas, Delaware, Pennsylvania, Oklahoma, North Carolina and Louisiana and the City of New York. The Company neither files in, nor believes it has a filing requirement in, any foreign jurisdictions. The Company's federal income tax returns through fiscal 2010 have either been reviewed by the IRS, or the related statute of limitations has expired and all matters have been settled. The IRS is currently examining tax returns for fiscal 2011 through fiscal 2013. The State of New Jersey has completed its sales and use tax examinations through March 31, 2010, and its corporate business tax examinations through September 30, 2008. All periods subsequent to those ended September 30, 2009, are statutorily open to examination in all applicable states with the exception of New York. In New York, all periods subsequent to September 30, 2011, are statutorily open to examination. In May 2013, the State of New Jersey completed their audit of NJRES for the periods ended September 30, 2008, 2009 and 2010. The audit resulted in a refund of $1.1 million that was related primarily to state apportionment differences. NJR evaluates its tax positions to determine the appropriate accounting and recognition of potential future obligations associated with unrecognized tax benefits. As of September 30, 2014 and 2013, based on its analysis, the Company determined there was no need to recognize any liabilities associated with uncertain tax positions. As of September 30, 2014, the Company has state income tax net operating losses of approximately $153.2 million, which generally have a life of 20 years. The company has recorded a deferred state tax asset of approximately $9 million on the Consolidated Balance Sheets, reflecting the tax benefit associated with the loss carryforwards. In addition, as of September 30, 2014 and 2013, the Company has recorded a valuation allowance of $212,000 and $262,000, respectively, because it believes that it is more likely than not that the deferred tax assets related to CR&R and NJR will expire unused. The deferred tax assets will expire as follows:
(Thousands) |
Fiscal years 2015 - 2018 | $ | 78 |
Fiscal years 2019 - 2023 | — |
Fiscal Years 2024 - 2028 | — |
Fiscal Years 2029 - 2034 | 8,946 |
Total | $ | 9,024 |
In addition, as of September 30, 2014, the Company has an ITC carryforward of approximately $7.5 million, which has a life of 20 years. This carryforward will begin to expire in fiscal 2034. In September 2013, the U.S. Department of the Treasury and the IRS released final regulations that provide guidance on applying Section 263(a) of the Internal Revenue Code to amounts paid to acquire, produce, or improve tangible property, as well as rules for materials and supplies. Implementation of these final regulations in September 2013 had no material impact on NJR's and its subsidiaries' results of operations, financial condition or cash flow.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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