Note 9: Income Taxes

Provisions for Federal and State Income Taxes reflected as operating expenses in the accompanying consolidated statements of earnings for the years ended December 31, 2014, 2013 and 2012 are shown in the table below:


	($000’s)
	2014			2013			2012
Current Federal Tax Provision (Benefit)
Operating Income	$	3,179		$	—		$	—
Current Benefit of Operating Loss Carrybacks		(3,179	)		—			—

Total Current Federal Tax Provision (Benefit)		—			—			—

Deferred Federal Tax Provision (Benefit)
Utility Plant Differences		10,649			28,907			6,019
Net Operating Loss Carryforwards		2,589			(8,053	)		2,835
Regulatory Assets and Liabilities		(5,946	)		(11,483	)		472
Other, net		3,517			681			(241	)

Total Deferred Federal Tax Provision (Benefit)		10,809			10,052			9,085

Total Federal Tax Provision		10,809			10,052			9,085

State
Current		(387	)		386			132
Deferred		3,573			2,214			1,759

Total State Tax Provision		3,186			2,600			1,891

Total Provision for Federal and State Income Taxes	$	13,995		$	12,652		$	10,976

The differences between the Company’s provisions for Income Taxes and the provisions calculated at the statutory federal tax rate, expressed in percentages, are shown below:


	2014			2013			2012
Statutory Federal Income Tax Rate		34	%		34	%		34	%
Income Tax Effects of:
State Income Taxes, net		2			5			5
Utility Plant Differences		(1	)		(2	)		(2	)
Other, net		1			—			1

Effective Income Tax Rate		36	%		37	%		38	%

Temporary differences which gave rise to current deferred tax assets and liabilities in 2014 and 2013, are shown below:


Current Deferred Income Taxes (000’s)	2014		2013
Accrued Revenue, Current Portion	$	3,038	$	6,583
Other, net		90		108

Total Current Deferred Income Tax Liabilities	$	3,128	$	6,691

Temporary differences which gave rise to noncurrent deferred tax assets and liabilities in 2014 and 2013, are shown below:


Noncurrent Deferred Income Taxes (000’s)	2014			2013
Utility Plant Differences	$	120,534		$	102,479
Retirement Benefit Obligations		(44,829	)		(28,287	)
Net Operating Loss Carryforwards		(13,122	)		(17,403	)
Regulatory Assets & Liabilities		12,740			17,174
AMT Tax Credit Carryforwards		(2,139	)		(1,538	)
Other, net		(314	)		754

Total Noncurrent Deferred Income Tax Liabilities	$	72,870		$	73,179

The Company is subject to federal and state income taxes as well as various other business taxes. The Company accounts for income taxes in accordance with the FASB Codification guidance on Income Taxes which requires an asset and liability approach for the financial accounting and reporting of income taxes. Significant judgments and estimates are required in determining the current and deferred tax assets and liabilities. The Company’s deferred tax assets and liabilities reflect its best assessment of estimated future taxes to be paid. Periodically, the Company assesses the realization of its deferred tax assets and liabilities and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts and circumstances that gave rise to the revision become known.

The Company filed its tax returns for the year ended December 31, 2013 with the Internal Revenue Service in September 2014 and generated additional federal net operating loss (NOL) carryforward assets of $0.6 million and state NOL carryforward assets of $1.0 million principally due to current tax repair deductions and tax depreciation. For the year ended December 31, 2014, the Company utilized $3.2 million of its federal NOL carryforward assets and $2.7 million of its state NOL carryforward assets in the calculation of its provisions for federal and state income taxes for the period. As of December 31, 2014, the Company had recorded cumulative federal and state NOL carryforward assets of $13.1 million to offset against taxes payable in future periods. If unused, the Company’s state NOL carryforward assets will begin to expire in 2019 and the federal NOL carryforward assets will begin to expire in 2029. In addition, at December 31, 2014, the Company had $2.1 million of cumulative Alternative Minimum Tax (AMT) credit carryforwards to offset future AMT taxes payable indefinitely.

The Company evaluated its tax positions at December 31, 2014 in accordance with the FASB Codification, and has concluded that no adjustment for recognition, derecognition, settlement and foreseeable future events to any tax liabilities or assets as defined by the FASB Codification is required. The Company remains subject to examination by Federal, Maine, Massachusetts, and New Hampshire tax authorities for the tax periods ended December 31, 2011; December 31, 2012; and December 31, 2013.