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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | 8. Income Taxes The components of the provision (benefit) for income taxes for the years ended December 31, 2018 and 2017 are as follows:
|  | Year Ended December 31, |
(Thousands of dollars) |  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (4,742 | ) |  | $ | 4,522 |
State |  |  | (146 | ) |  |  | 262 |
Total current |  |  | (4,888 | ) |  |  | 4,784 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 7,620 |  |  |  | (13,226 | )
State |  |  | 246 |  |  |  | 689 |
Total deferred |  |  | 7,866 |  |  |  | (12,537 | )
Total income tax provision (benefit) |  | $ | 2,978 |  |  | $ | (7,753 | )
|  | At December 31, |
(Thousands of dollars) |  | 2018 |  |  | 2017 |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Accrued liabilities |  | $ | 519 |  |  | $ | 349 |
Allowance for doubtful accounts |  |  | 51 |  |  |  | 22 |
Derivative Contracts |  |  | 0 |  |  |  | 684 |
Disallowed Interest Carryforwards |  |  | 769 |  |  |  | 0 |
Alternative minimum tax credits |  |  | 4,760 |  |  |  | 9,919 |
State Net operating loss carry-forwards |  |  | 469 |  |  |  | 528 |
Percentage depletion carry-forwards |  |  | — |  |  |  | 727 |
General Business Credits |  |  | 137 |  |  |  | — |
Total deferred tax assets |  |  | 6,705 |  |  |  | 12,229 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Basis differences relating to managed partnerships |  |  | 2,296 |  |  |  | 3,193 |
Depletion and depreciation |  |  | 36,711 |  |  |  | 33,998 |
Derivative Contracts |  |  | 526 |  |  |  | — |
Total deferred tax liabilities |  |  | 39,533 |  |  |  | 37,191 |
Net deferred tax liabilities |  | $ | 32,828 |  |  | $ | 24,962 |
The total provision for income taxes for the years ended December 31, 2018 and 2017 varies from the federal statutory tax rate as a result of the following:
|  | Year Ended December 31, |
(Thousands of dollars) |  | 2018 |  |  | 2017 |
Expected tax expense |  | $ | 3,676 |  |  | $ | 11,643 |
Revaluation of deferred tax attributes |  |  | 0 |  |  |  | (20,204 | )
Executive Compensation |  |  | 553 |  |  |  | 0 |
State income tax, net of federal benefit |  |  | 79 |  |  |  | 717 |
Percentage depletion |  |  | (140 | ) |  |  | (89 | )
Marginal Well Production Credits |  |  | (1,186 | ) |  |  | 0 |
Other, net |  |  | (4 | ) |  |  | 180 |
Total income tax provision (benefit) |  | $ | 2,978 |  |  | $ | (7,753 | )
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. On December 22, 2017, the U.S. enacted into legislation the Tax Cuts and Jobs Act (2017 Tax Act). For the year ended December 31, 2017, the Company recorded a tax benefit of $20.204 million directly related to the effect of the 2017 Tax Act, based on the remeasurement of deferred tax assets and liabilities at new lower corporate tax rate. Under the 2017 Tax Act, the company may use alternative minimum tax (AMT) credits to fully offset any regular tax liability. In addition, a portion of the minimum tax credit which exceeds the regular tax liability is refundable in future years. The refundable portion is 50% of any excess credit in the years 2018 through 2020 and 100% in 2021. The Company expects to receive a refund of $4.760 million in 2019 based on refundable credits claimed on the 2018 return, and additional $4.760 million in credits against regular tax and refunds of previously paid taxes on its tax returns for the years 2019 through 2021. The Company is entitled to marginal well production credits under Internal Revenue Code section 45I. In the fourth quarter of 2018, the Company filed amended returns claiming $ 1.186 million in credits relating to 2016 and 2017 gas production. The credits cannot be used to offset alternative minimum tax liability, so no refunds were received for those years, but rather the full amount of the credits was carried forward as a General Business Credit. The Marginal Well Credit is phased out when oil and gas prices exceed certain levels. Although the Internal Revenue Service (IRS) has not yet published anything regarding the availability of the credit in 2018, based on the Company’s own calculations, and informal discussions with the IRS, it appears that no credit will be available. The Company is entitled to percentage depletion on certain of its wells, which is calculated without reference to the basis of the property. To the extent that such depletion exceeds a property’s basis, it creates a permanent difference, which lowers the Company’s effective rate. The availability of the percentage depletion deduction is phased out as an entity’s production exceeds certain levels, and based on the Company’s increasing production the percentage depletion deduction is becoming less significant. The Company is allowed a credit against the Texas Franchise Tax based on net operating losses incurred in prior periods. The credits allowed are $89 thousand in the years 2019 through 2026. Any credits not utilized in a given year due to the allowable credit exceeding the tax liability may be carried forward. No credit may be carried forward past 2026. The value of the credit is calculated net of the federal income tax effect. The Company has not recorded any provision for uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The 2004, 2005, 2006, 2009 and 2014 federal income tax returns have been audited by the Internal Revenue Service. The 2017 return has been selected for examination by the IRS. Returns for unexamined earlier years may be examined and adjustments made to the amount of percentage depletion and AMT credit carryforwards flowing from those years into an open tax year, although in general no assessment of income tax may be made for those years on which the statute has closed. State returns for the years 2016 through 2018 remain open for examination by the relevant taxing authorities.

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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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