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INCOME TAXES | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES |
NOTE 12. | INCOME TAXES
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. For financial reporting purposes, income before income taxes were:
|  | Years Ended December 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  |  | (In thousands) |
Income (loss) from continuing operations before income taxes |  | $ | 183,902 |  |  | $ | (8,696 | ) |  | $ | (2,363 | )
The expense (benefit) for income taxes consists of:
|  | Years Ended December 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (In thousands) |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 42,231 |  |  | $ | (3,044 | ) |  | $ | — |
State |  |  | 1,210 |  |  |  | 10 |  |  |  | — |
Deferred and Other: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (42,231 | ) |  |  | 3,044 |  |  |  | 46 |
State |  |  | — |  |  |  | 170 |  |  |  | — |
Total Tax Expense |  | $ | 1,210 |  |  | $ | 180 |  |  | $ | 46 |
The reconciliation between the Company’s effective tax rate on income from continuing operations and the statutory rate is as follows:
|  | Years Ended December 31,
|  | 2018 |  | 2016 |  | 2015
|  | (In thousands)
Income Tax Expense (Benefit) at Federal Statutory Rate |  | $ | 38,619 |  |  | $ | (3,044 | ) |  | $ | (827 | )
State and Local Income Taxes Net of Federal Tax Benefit |  |  | 1,210 |  |  |  | 180 |  |  |  | — |
Permanent tax differences |  |  | (224 | ) |  |  | — |  |  |  | — |
Temporary tax differences |  |  |  |  |  |  |  |  |  |  |  |
Installment note on land sale |  |  | (2,875 | ) |  |  | (1,918 | ) |  |  |  |
Allowance for losses on note receivables |  |  | (712 | ) |  |  | (2,372 | ) |  |  |  |
Deferred gains |  |  | (7,041 | ) |  |  | (10,758 | ) |  |  |  |
Basis differences on fixed assets |  |  | 22,110 |  |  |  | 9,284 |  |  |  |  |
Other basis/timing differences |  |  | (7,646 | ) |  |  | 5,764 |  |  |  |  |
Use/generation on net operating loss carryforwards |  |  | (42,231 | ) |  |  | 3,044 |  |  |  | 873 |
Reported Income Tax Expense |  | $ | 1,210 |  |  | $ | 180 |  |  | $ | 46 |
Effective Tax Rate |  |  | 0.7 | % |  |  | N/A |  |  |  | N/A |
The company is subject to taxation in the United States and various states and foreign jurisdictions. As of December 31, 2018, the Company’s tax years for 2017, 2016, and 2015 are subject to examination by the tax authorities. With few exceptions, as of December 31, 2018, the Company is no longer subject to U.S federal, state, local, or foreign examinations by tax authorities for the years before 2014. The 2017 effective tax rate is driven primarily by the passing of the Tax Cuts and Jobs Act by congress. This act has reduced the statutory tax rate for corporations from 35% to 21% starting in 2018. As a result, the tax assets of ARI had to be re-priced to reflect the new rate for future years with the impact on the 2017 provision for income taxes. Components of the Net Deferred Tax Asset or Liability
|  | Years Ended December 31,
|  | 2018 |  | 2017
|  | (In thousands)
Deferred Tax Assets: |  |
Allowance for losses on notes |  | $ | 2,879 |  |  | $ | 3,591 |
Installment note on land sale |  |  | — |  |  |  | 2,875 |
Deferred Gain |  |  | 3,999 |  |  |  | 11,040 |
Net Operating Loss Carryforward |  |  | 8,700 |  |  |  | 50,931 |
Total Deferred Tax Assets |  |  | 15,578 |  |  |  | 68,437 |
Less: Valuation Allowance |  |  | (12,246 | ) |  |  | (42,995 | )
Total Net Deferred Tax Assets |  |  | 3,332 |  |  |  | 25,442 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Deferred gain |  |  | — |  |  |  | — |
Basis Differences for Fixed Assets |  |  | (3,332 | ) |  |  | (25,442 | )
Total Deferred Tax Liability |  |  | (3,332 | ) |  |  | (25,442 | )
Current Net Deferred Tax Asset |  |  | 3,332 |  |  |  | 25,442 |
Long-Term Net Deferred Tax Liability |  |  | (3,332 | ) |  |  | (25,442 | )
Net deferred tax asset (liability) |  | $ | — |  |  | $ | — |
Operating Loss and Tax Credit Carryforwards We have federal income tax net operating losses (NOLs) carryforwards related to our domestic operations of approximately $26 million on a standalone basis, which have an indefinite life. We also have state NOLs in many of the various states in which we operate. Valuation Allowance Reversal Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. At December 31, 2018, 2017 and 2016 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 valuation allowance was established.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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