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, 2015, 2014 and 2013 are shown in the table below:


	($000’s)
	2015			2014			2013
Current Federal Tax Provision (Benefit)
Operating Income	$	3,710		$	3,179		$	—
Current Benefit of Operating Loss Carryforwards		(3,710	)		(3,179	)		—

Total Current Federal Tax Provision (Benefit)		—			—			—

Deferred Federal Tax Provision (Benefit)
Utility Plant Differences		17,924			10,649			28,907
Net Operating Loss Carryforwards / (Carrybacks)		2,374			2,589			(8,053	)
Regulatory Assets and Liabilities		(6,101	)		(5,946	)		(11,483	)
Other, net		(1,784	)		3,517			681

Total Deferred Federal Tax Provision (Benefit)		12,413			10,809			10,052

Total Federal Tax Provision		12,413			10,809			10,052

State
Current		3,530			(387	)		386
Deferred		(500	)		3,573			2,214

Total State Tax Provision		3,030			3,186			2,600

Total Provision for Federal and State Income Taxes	$	15,443		$	13,995		$	12,652

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:


	2015			2014			2013
Statutory Federal Income Tax Rate		34	%		34	%		34	%
Income Tax Effects of:
State Income Taxes, net		5			2			5
Utility Plant Differences		(2	)		(1	)		(2	)
Tax Credits and Other, net		—			1			—

Effective Income Tax Rate		37	%		36	%		37	%

Temporary differences which gave rise to current deferred tax assets and liabilities in 2015 and 2014, are shown below:


Current Deferred Income Taxes (000’s)	2015			2014
Accrued Revenue, Current Portion	$	5,090		$	(3,038	)
Other, net		(348	)		(90	)

Total Current Deferred Income Tax Assets (Liabilities)	$	4,742		$	(3,128	)

Temporary differences which gave rise to noncurrent deferred tax assets and liabilities in 2015 and 2014, are shown below:


Noncurrent Deferred Income Taxes (000’s)	2015			2014
Utility Plant Differences	$	141,185		$	120,534
Retirement Benefit Obligations		(43,543	)		(44,829	)
Net Operating Loss Carryforwards		(10,500	)		(13,122	)
Regulatory Assets & Liabilities		10,535			12,740
AMT Tax Credit Carryforwards		(2,677	)		(2,139	)
Other, net		(2,792	)		(314	)

Total Noncurrent Deferred Income Tax Liabilities	$	92,208		$	72,870

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, 2014 with the Internal Revenue Service in September 2015 and generated additional federal net operating loss (NOL) carryforward assets principally due to current tax repair deductions, tax depreciation and research and development deductions. For the year ended December 31, 2015, the Company utilized $3.7 million of its federal NOL carryforward assets in the calculation of its provisions for income taxes for the period. As of December 31, 2015, the Company had recorded cumulative federal NOL carryforward assets of $11.3 million to offset against taxes payable in future periods. If unused, the Company’s federal NOL carryforward assets will begin to expire in 2029. In addition, at December 31, 2015, the Company had $2.1 million of cumulative Alternative Minimum Tax (AMT) credit carryforwards to offset future AMT taxes payable indefinitely.

In 2015, Unitil recognized a tax benefit of $63,000 in the tax provision related to Federal research and development tax credits under the rules of section 41 of the Internal Revenue Code, which the Company claimed on its 2014 tax return filed in September of 2015. The Company will continue to recognize a tax benefit on its incremental qualified research expenses and has recognized a tax benefit in the tax provision of $288,000 related to 2015 expenditures.

The Company evaluated its tax positions at December 31, 2015 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, 2012; December 31, 2013; and December 31, 2014.