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INCOME TAXES
 12 Months Ended
Dec. 31, 2015
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 11.     INCOME TAXES

 

For 2015 ARL, TCI, and IOT all had taxable income. For 2014 ARL, TCI and IOT had a combined net taxable loss and ARL recorded no current tax (benefit) or expense. For 2013 ARL consolidated with TCI and IOT had a net taxable loss resulting in a tax (benefit) to ARL. The expense (benefit) in each year was calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory rate of 35%.

 

Current expense (benefit) is attributable to (dollars in thousands):

                         
    2015     2014     2013  
                         
Income (loss) from continuing operations   $ 517     $ (1,169 )   $ (24,217 )
Income (loss) from discontinued operations     483       1,169       17,415  
The full 2013 tax (benefit) to ARL comes from MRHI   $ 1,000     $ —     $ (6,802 )

 

The Federal income tax expense differs from the amount computed by applying the corporate tax rate of 35% to the income before income taxes as follows (dollars in thousands): 

                   
    2015     2014     2013  
                         
Computed “expected” income tax (benefit) expense   $ 1,465     $ 14,061     $ 15,684  
Book to tax differences in gains on sale of property     (12,463 )     (2,350 )     (20,373 )
Book to tax differences from entities not consolidated for tax purposes     13,721       (23,900 )     (33,565 )
Book to tax differences of depreciation and amortization     (490 )     1,415       1,250  
Valuation allowance against current net operating loss benefit     20,615       20,125       17,415  
Other book to tax differences     (22,498 )     (9,351 )     17,208  
Total   $ 350     $ —     $ (2,381 )
                         
Alternative minimum tax   $ —     $ —     $ —  

 

Deferred income taxes reflect the tax effects of temporary timing differences between carrying amounts of assets and liabilities reflected on the financial statements and the amounts used for income tax purposes. ARL’s tax basis in its net assets differs from the amount at which its net assets are reported for financial statement purposes, principally due to the accounting for gains and losses on property sales, and depreciation on owned properties. The tax effects of temporary differences and net operating loss carry forwards that give rise to the deferred tax assets are presented below (amounts in thousands):

                         
    2015     2014     2013  
                         
Net operating losses   $ 67,112     $ 74,357     $ 88,486  
AMT credits     2,751       2,201       2,201  
Basis difference of:                        
Real estate holdings and equipment     (11,197 )     10,337       11,959  
Notes receivable     6,475       6,946       7,448  
Investments     (14,966 )     (14,950 )     (14,960 )
Notes payable     3,455       8,189       13,360  
Deferred gains     19,868       18,086       18,746  
Total   $ 73,498     $ 105,166     $ 127,240  
Deferred tax valuation allowance     (73,498 )     (105,166 )     (127,240 )
Net deferred tax asset   $ —     $ —     $ —  

 

At December 31, 2015, 2014 and 2013 ARL had a net deferred tax asset due to tax deductions available to it in future years. However, as management could not determine that it was more likely than not that ARL would realize the benefit of the deferred tax asset, a 100% valuation allowance was established.

 

ARL has prior tax net operating losses and capital loss carryforwards of approximately $54.0 million expiring through the year 2033. The alternative minimum tax credit balance increased in 2015 to approximately $2.8 million. The credit has no expiration date..

 

ARL is subject to routine audits by taxing jurisdictions; however, there are currently no audits in progress for any tax periods. Management believes ARL is no longer subject to income tax examinations for years prior to 2012.