Entity information:

10.Income Taxes.

 

Fourth quarter 2017 net income included $12,043,000, or $1.20 per share, due to a deferred tax benefit resulting from revaluing the company’s net deferred tax liabilities per the Tax Cuts and Jobs Act of 2017. The company’s net deferred tax liability was reduced as a result of the lower corporate income tax rates applicable to the Company going forward. The adjustment included $209,000 from reducing the effective tax rate for 2017 from 39.5% to 39.07% as a result of not being required to add to deferred taxes in anticipation of future taxable income in excess of $10 million where the federal rate increases from 34% to 35%. Our tax rate including the effect of state income taxes, but not including excess tax benefits from stock option exercises, is projected to decrease from 39.07% to 27.05% starting in 2018.

 

Income tax expense may differ from the above estimate, possibly materially, due to, changes in interpretations of the Tax Act or related accounting guidance, the projected deferred tax changes for fiscal 2018, and projected effective state tax rates. We currently anticipate finalizing and recording any resulting adjustments by the end of our current fiscal year ending December 31, 2018.

 

The provision for income taxes for continuing operations consists of the following (in thousands):

    Year ended   Three months ended   Year ended   Year ended
    December 31,   December 31,   September 30,   September 30,
    2017   2016   2016   2015
  Current:                                  
    Federal     $ (1,763  )     693       4,807       1,803  
    State       (429  )     185       1,165       524  
          (2,192 )      878       5,972       2,327  
  Deferred       9,521       19     1,879       1,568  
                                     
  Total     $ 7,329       897       7,851       3,895  

 

 

A reconciliation between the amount of tax shown above and the amount computed at the statutory Federal income tax rate follows (in thousands):

    Year ended   Three months ended   Year ended   Year ended
    December 31,   December 31,   September 30,   September 30,
    2017   2016   2016   2015
Amount computed at statutory                                
  Federal rate   $ 16,723       777       6,797       3,396  
State income taxes (net of Federal                                
  income tax benefit)     2,476       115       1,002       504  
Tax Cut and Jobs Act of 2017     (11,834 )      —         —         —    
Other, net     (36 )      5       52       (5 )
Provision for income taxes   $ 7,329       897       7,851       3,895  

 

 

In this reconciliation, the category “Other, net” consists of changes in unrecognized tax benefits, permanent tax differences related to non-deductible expenses, special tax rates and tax credits, interest and penalties, and adjustments to prior year estimates.

 

The types of temporary differences and their related tax effects that give rise to deferred tax assets and deferred tax liabilities are presented below (in thousands):

 

    As of   As of   As of
    December 31,   December 31,   September 30,
    2017   2016   2016
Deferred tax liabilities:                        
 Property and equipment   $ 25,212       15,127       15,197  
 Depletion     660       776       526  
 Unrealized rents     1,166       1,786       1,823  
 Prepaid expenses     431       763       913  
  Gross deferred tax liabilities     27,469       18,452       18,459  
Deferred tax assets:                        
 Employee benefits and other     1,487       1,997       2,023  
Gross deferred tax assets     1,487       1,997       2,023  
Net deferred tax liability   $ 25,982       16,455       16,436  

 

 

The Company has no unrecognized tax benefits.

 

FRP tax returns in the U.S. and various states that include the Company are subject to audit by taxing authorities. As of December 31, 2017, the earliest tax year that remains open for audit in the Unites States is 2012.