XML 44 R16.htm IDEA: XBRL DOCUMENT v3.2.0.727
Income Taxes
6 Months Ended
Jun. 30, 2015
Income Taxes [Abstract]  
Income Taxes

Note 9 – Income Taxes

 

The Internal Revenue Service (IRS) has issued final regulations pertaining to the deductibility of costs that qualify as repairs on tangible property. The regulations, which the Company will adopt by filing a change in accounting method request with its 2014 Federal income tax return, redefine the characteristics previously used by the Company to determine tax deductibility of expenditures associated with tangible property. Under the regulations, the IRS has provided guidelines for certain industries, but not for regulated public water utilities. Consequently, the Company undertook a comprehensive study to support the adoption and integration of the new regulations into its tax policies prospectively, and to also determine the level of deductibility for income tax purposes, if any, for expenditures incurred on projects completed in prior years where such expenditures were capitalized, but may now be considered currently deductible as repairs under the new regulations. The Company is currently preparing its 2014 Federal income tax return, which is expected to be filed on or before September 15, 2015, and will include the final determined amount of expenditures deductible under the new regulations. Results from the aforementioned study, which is subject to completion and requires firing with the IRS, preliminarily indicate there may be approximately $19.0 million of refundable taxes previously paid to the IRS. However, it is probable that any net tax benefits that may result from adopting the study findings will be considered in determining the revenue requirement used to set base rates for the Company in a future regulatory proceeding. Consequently, adoption of the new regulations will not have a significant impact on the Company's financial statements or effective tax rate.