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Income Taxes
 12 Months Ended
Dec. 31, 2011
IncomeTaxesAbstract  
Income Taxes

Note 3 - Income Taxes

 

Income tax expense differs from the amount computed by applying the statutory rate on book income subject to tax for the following reasons:

   (Thousands of Dollars)
Years Ended December 31,		  
   2011   2010   2009 
Income Tax at Statutory Rate  $6,816   $7,224   $5,147 
Tax Effect of:               
 Utility Plant Related   (620)   (826)   (247)
 State Income Taxes – Net   305    336    339 
 Employee Benefits   1    33    (86)
 Other   25    19    7 
Total Income Tax Expense  $6,527   $6,786   $5,160 

 

Income tax expense is comprised of the following:

 

   (Thousands of Dollars)
Years Ended December 31,		 
   2011   2010   2009 
Current:               
  Federal  $3,550   $5,584   $(208)
  State   395    481    35 
Deferred:               
  Federal   2,594    770    4,933 
  State   67    30    479 
  Investment Tax Credits   (79)   (79)   (79)
Total Income Tax Expense  $6,527   $6,786   $5,160 
                

The statutory review periods for income tax returns for the years prior to 2009 have been closed. An examination by the Internal Revenue Service of Middlesex’s Federal income tax returns for 2007 and 2008 was completed during 2010 and resulted in a net refund, including interest, of less than $0.1 million. The refund noted above was recorded to the appropriate current and deferred tax accounts and the interest was reported as other income. In the event that there are interest and penalties associated with income tax adjustments in future examinations, these amounts will be reported under interest expense and other expense, respectively. There are no unrecognized tax benefits resulting from prior period tax positions. The Company is not aware of any uncertain tax positions that could result in a future tax liability.

 

 

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax purposes. The components of the net deferred tax liability are as follows:

   (Thousands of Dollars) 
   December 31, 
   2011   2010 
Utility Plant Related  $35,135   $32,010 
Customer Advances   (3,737)   (3,840)
Employee Benefits   6,342    1,912 
Investment Tax Credits (ITC)   1,146    1,225 
Other   (718)   (391)
Total Deferred Tax Liability and ITC  $38,168   $30,916