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Note 6 - Income Taxes | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 6 . Income Taxes Income (l oss) before income taxes for each of the two years in the period ended December 31, 2017 was subject to taxation under United States jurisdictions only. The provision for income taxes consists of the following (in thousands):
|  | 2017 |  |  | 2016 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (2 | ) |  | $ | (2 | )
State |  |  | 124 |  |  |  | 127 |
Total current income taxes |  |  | 122 |  |  |  | 125 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |
State |  |  | - |  |  |  | - |
Total deferred income taxes |  |  | - |  |  |  | - |
Total provision for income taxes |  | $ | 122 |  |  | $ | 125 |
On December 22, 2017, legislation commonly known as the Tax Cuts and Jobs Act (“ Tax Act” or the “Act”), was signed in to law. The Tax Act, among other changes, reduces the U.S. federal corporate tax rate from 35% to 21%, repeals the Alternative Minimum Tax, eliminates certain deductions, requires taxpayers to pay a one -time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, creates new taxes on certain foreign sourced earnings and changes the carryforward period and utilization of Net Operating Losses generated after December 31, 2017. On December 31, 2017, Avalon did not have any foreign subsidiaries and the international aspects of the Tax Act are not applicable. In connection with the initial analysis of the impact of the Tax Act, Avalon remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The Company has calculated it’s best estimate resulting from the impact of the Act in our year end income tax provision in accordance with our understanding of the Act and guidance available as of the date of this filing. The Company has recognized a $262,000 provisional expense for the tax impacts of Tax Act in its consolidated financial statements for the year ended December 31, 2017. The remeasurement of the deferred tax balance was primarily offset by application of the valuation allowance. The majority of the provisional expense is related to the revaluation of deferred tax assets and liabilities at December 31, 2017 as a result of Tax Act. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the 2017 Tax Act will be applied or otherwise administered that is different from our interpretation. As we complete our analysis of the 2017 Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made . The tax effects of temporary differences that give rise to significant porti ons of the deferred tax assets and liabilities at December 31, 2017 and 2016 are as follows (in thousands):
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accounts receivable, allowance for doubtful accounts |  | $ | 60 |  |  | $ | 87 |
Reserves not deductible until paid |  |  | 187 |  |  |  | 300 |
Net operating loss carryforwards |  |  |  |  |  |  |  |
Federal |  |  | 1,794 |  |  |  | 2,764 |
State |  |  | 556 |  |  |  | 537 |
Federal tax credit |  |  | 476 |  |  |  | 398 |
Other |  |  | - |  |  |  | 12 |
Gross deferred tax assets |  |  | 3,073 |  |  |  | 4,098 |
Less valuation allowance |  |  | (1,313 | ) |  |  | (1,453 | )
Deferred tax assets net of valuation allowance |  | $ | 1,760 |  |  | $ | 2,645 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  | $ | (1,582 | ) |  | $ | (2,399 | )
Other |  |  | (170 | ) |  |  | (238 | )
Gross deferred tax liabilities |  | $ | (1,752 | ) |  | $ | (2,637 | )
Net deferred tax asset |  | $ | 8 |  |  | $ | 8 |
The $1,752,000 of deferred tax liabilities will reverse in the same period and jurisdiction and is of the same character as the temporary differences giving rise to the $1,760,000 of deferred tax assets. Avalon has not provided a valuation allowance on the amount of deferred tax assets that it estimates will be utilized. If future taxable income is less than the amount that has been assumed in assessing the recoverability of the deferred tax assets, then an increase in the valuation allowance will be required, with a corresponding increase to income tax expense. Likewise, should Avalon ascertain in the future that it is more likely than not that deferred tax assets will be realized in excess of the net deferred tax assets, all or a portion of the $1,313,000 valuation allowance as of December 31, 2017, would be reversed as a benefit to the provision for income taxes in the period such determination was made. The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income (loss) before income taxes as a result of the following differences (in thousands):
|  | 2017 |  |  | 2016 |
Loss before income taxes |  | $ | (694 | ) |  | $ | (284 | )
Less net loss attributable to non-controlling interest in subsidiary |  |  | (509 | ) |  |  | (340 | )
Income (loss) before income taxes attributable to |  |  |  |  |  |  |  |
Avalon Holdings Corporation common shareholders |  |  | (185 | ) |  |  | 56 |
Federal statutory rate |  |  | 35 | % |  |  | 35 | %
Computed Federal provision (benefit) for income taxes |  |  | (65 | ) |  |  | 20 |
State income taxes, net of federal income tax benefits |  |  | 81 |  |  |  | 82 |
Change in valuation allowance |  |  | (140 | ) |  |  | (198 | )
Increase in available federal tax credit |  |  | (78 | ) |  |  | (60 | )
Other nondeductible expenses |  |  | 42 |  |  |  | 41 |
Decrease (increase) in net operating loss carryforward: |  |  |  |  |  |  |  |
State |  |  | (19 | ) |  |  | 231 |
Federal |  |  | (4 | ) |  |  | 5 |
Deferred tax rate change |  |  | 262 |  |  |  | - |
Other, net |  |  | 43 |  |  |  | 4 |
Total provision for income taxes |  | $ | 122 |  |  | $ | 125 |
Avalon is subject to income taxes in the U.S. federal and various states jurisdictions. With few exceptions, Avalon is no longer subject to U.S. federal, state and local income tax examinations by taxing autho rities for the years before 2013. Avalon recognizes any interest and penalty assessed by taxing authorities as a component of interest expense and other expense, respectively. There were no accruals for the payment of interest and penalties for 2017 and 2016. Avalon made net income tax payments of approximately $144,000 and $54,000 in 2017 and 2016, respectively. At December 31, 2017, Avalon has taxable loss carryforwards for federal income tax purposes aggregating approximately $8,518,000 which are available to offset future federal taxable income. These carryforwards expire in 2021 through 2037. In addition, at December 31, 2017, certain subsidiaries of Avalon have net operating loss carryforwards for state purposes of approximately $8,422,000 which are available to offset future state taxable income. These carryforwards expire at various dates through 2037. A valuation allowance has been provided because it is more likely than not that the deferred tax assets relating to certain of the federal and state loss carryforwards will not be realized.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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