XML 40 R22.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Taxes [Abstract] |
Income Taxes | 14. Income Taxes The provisions for income taxes consist of:
|  | 2020 |  |  | 2019 |
Federal current |  | $ | 1,376 |  |  | $ | 1,148 |
State current |  |  | 554 |  |  |  | 451 |
Federal deferred |  |  | 247 |  |  |  | 475 |
State deferred |  |  | (120 | ) |  |  | 205 |
Federal investment tax credit, net of current utilization |  |  | (39 | ) |  |  | (39 | )
Total income taxes |  | $ | 2,018 |  |  | $ | 2,240 |
A reconciliation of the statutory Federal tax provision to the total provision follows:
|  | 2020 |  |  | 2019 |
Statutory Federal tax provision |  | $ | 3,909 |  |  | $ | 3,495 |
State income taxes, net of Federal benefit |  |  | 426 |  |  |  | 574 |
IRS TPR deduction |  |  | (1,979 | ) |  |  | (1,642 | )
Tax-exempt interest |  |  | (29 | ) |  |  | (25 | )
Amortization of investment tax credit |  |  | (39 | ) |  |  | (39 | )
Cash value of life insurance |  |  | (110 | ) |  |  | 6 |
Amortization of excess accumulated deferred income taxes on accelerated depreciation |  |  | (182 | ) |  |  | (149 | )
Other, net |  |  | 22 |  |  |  | 20 |
Total income taxes |  | $ | 2,018 |  |  | $ | 2,240 |
The Company filed for a change in accounting method under the IRS TPR effective in 2014. Under the change in accounting method, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return. The Company was permitted to make this deduction for prior years (the “catch-up deduction”) and for each year going forward (the “ongoing deduction”). As a result of the catch-up deduction, income tax benefits of $3,887 were deferred as a regulatory liability. After receiving approval from the PPUC in its most recent rate order, the Company began to recognize the catch-up deduction, recorded as a regulatory liability, over 15 years beginning March 1, 2019. As a result, the Company recognized $259 and $216 in income taxes during the years ended December 31, 2020 and 2019, respectively. As a result of the ongoing deduction, the net income tax benefits of $1,720 and $1,426 for the years ended December 31, 2020 and 2019, respectively, reduced income tax expense and flowed through to net income. The ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable. Both the ongoing and catch-up deductions result in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions. The 2017 Tax Act, among other things, reduces the federal statutory corporate tax rate for tax years beginning in 2018 from 34% to 21%, eliminates certain deductions, and eliminates bonus depreciation on qualified water and wastewater property. This resulted in the remeasurement of the federal portion of the Company’s deferred taxes as of December 31, 2017 to the 21% rate. The effect was recognized in income for the year ended December 31, 2017 for all deferred tax assets and liabilities except accelerated depreciation. Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation is recorded as a regulatory liability. The regulatory liability is a temporary difference so a deferred tax asset is recorded including the gross-up of revenue necessary to return, in rates, the effect of the temporary difference. The Company is recognizing the excess accumulated deferred income taxes on accelerated depreciation, recorded as a regulatory liability, over the remaining useful life of the underlying assets. As a result, the Company recognized $182 and $149 in income taxes during the years ended December 31, 2020 and 2019, respectively. The tax effects of temporary differences between book and tax balances that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2020 and 2019 are summarized in the following table:
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |
Reserve for doubtful accounts |  | $ | 189 |  |  | $ | 88 |
Compensated absences |  |  | 151 |  |  |  | 148 |
Deferred compensation |  |  | 1,375 |  |  |  | 1,276 |
Excess accumulated deferred income taxes on accelerated depreciation |  |  | 3,995 |  |  |  | 4,047 |
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences |  |  | 2,456 |  |  |  | 2,104 |
Customers’ advances for construction and contributions in aid of construction |  |  | 1,815 |  |  |  | 998 |
Revenue reduction for tax rate change |  |  | – |  |  |  | 7 |
Tax effect of pension regulatory liability |  |  | 7 |  |  |  | – |
Other costs deducted for book, not for tax |  |  | 64 |  |  |  | 69 |
Total deferred tax assets |  |  | 10,052 |  |  |  | 8,737 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Accelerated depreciation |  |  | 29,893 |  |  |  | 28,891 |
Basis differences from IRS TPR |  |  | 13,671 |  |  |  | 11,311 |
Investment tax credit |  |  | 356 |  |  |  | 384 |
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences |  |  | 8,088 |  |  |  | 6,987 |
Pensions |  |  | 638 |  |  |  | 525 |
Tax effect of pension regulatory asset |  |  | – |  |  |  | 106 |
Unamortized debt issuance costs |  |  | 500 |  |  |  | 531 |
Other costs deducted for tax, not for book |  |  | 444 |  |  |  | 428 |
Total deferred tax liabilities |  |  | 53,590 |  |  |  | 49,163 |
Net deferred tax liability |  | $ | 43,538 |  |  | $ | 40,426 |
In accordance with accounting standards, the net deferred tax liability is classified as a noncurrent deferred income tax liability on the balance sheets. No valuation allowance was required for deferred tax assets as of December 31, 2020 and 2019. In assessing the value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon expected future taxable income and the current regulatory environment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The Company determined that there were no uncertain tax positions meeting the recognition and measurement test of the accounting standards recorded in the years that remain open for review by taxing authorities, which are 2017 through 2019 for both federal and state income tax returns. The Company has not yet filed tax returns for 2020. The Company believes that it has fully complied with any changes pursuant to the 2017 Tax Act and has not taken any new positions in its 2020 income tax provision. The Company’s policy is to recognize interest and penalties related to income tax matters in other expenses. The Company paid no interest or penalties for the years ended December 31, 2020 and 2019, respectively.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration