Entity information:
NOTE 14 – INCOME TAXES
 
The provision for the Company’s income tax (expense) benefit is comprised of the following:
 
For the years ended June 30,
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
Current tax (expense) benefit
 
$
(333,000)
 
$
79,000
 
Deferred tax (expense) benefit
 
 
(168,000)
 
 
3,349,000
 
 
 
 
(501,000)
 
 
3,428,000
 
 
 
 
 
 
 
 
 
State
 
 
 
 
 
 
 
Current tax expense
 
 
(310,000)
 
 
(128,000)
 
Deferred tax benefit
 
 
290,000
 
 
640,000
 
 
 
 
(20,000)
 
 
512,000
 
 
 
 
 
 
 
 
 
 
 
$
(521,000)
 
$
3,940,000
 
 
The provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to loss before taxes as a result of the following differences:
 
For the years ended June 30,
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Statutory federal tax rate
 
$
440,000
 
$
4,471,000
 
State income taxes, net of federal tax benefit
 
 
(25,000)
 
 
465,000
 
Dividend received deduction
 
 
56,000
 
 
13,000
 
Noncontrolling interest
 
 
-
 
 
(117,000)
 
Valuation allowance
 
 
(521,000)
 
 
(489,000)
 
Other
 
 
(471,000)
 
 
(403,000)
 
 
 
$
(521,000)
 
$
3,940,000
 
 
The components of the deferred tax asset and liabilities are as follows:
 
 
 
June 30, 2017
 
June 30, 2016
 
Deferred tax assets:
 
 
 
 
 
 
 
Net operating loss carryforwards
 
$
14,302,000
 
$
11,372,000
 
Capital loss carryforwards
 
 
1,122,000
 
 
1,302,000
 
Investment impairment reserve
 
 
1,778,000
 
 
1,898,000
 
Accruals and reserves
 
 
1,182,000
 
 
1,096,000
 
Unrealized gains on marketable securities
 
 
284,000
 
 
-
 
Tax credits
 
 
516,000
 
 
-
 
Equity earnings
 
 
-
 
 
758,000
 
Other
 
 
289,000
 
 
-
 
Valuation allowance
 
 
(3,388,000)
 
 
(2,824,000)
 
 
 
 
16,085,000
 
 
13,602,000
 
Deferred tax assets (liabilities):
 
 
 
 
 
 
 
Equity earnings
 
 
(2,624,000)
 
 
-
 
Deferred gains on real estate sale and depreciation
 
 
(8,816,000)
 
 
(8,321,000)
 
Unrealized gains on marketable securities
 
 
-
 
 
(335,000)
 
State taxes
 
 
(538,000)
 
 
(961,000)
 
 
 
 
(11,978,000)
 
 
(9,617,000)
 
Net deferred tax asset
 
$
4,107,000
 
$
3,985,000
 
 
As of June 30, 2017, the Company had estimated net operating losses (NOLs) of $35,246,000 and $27,112,000 for federal and state purposes, respectively. Below is the break-down of the NOLs for Intergroup, Santa Fe and Portsmouth. The carryforward expires in varying amounts through the year 2037.
 
 
 
Federal
 
State
 
InterGroup
 
$
-
 
$
1,478,000
 
Santa Fe
 
 
8,180,000
 
 
2,951,000
 
Portsmouth
 
 
27,066,000
 
 
22,683,000
 
 
 
$
35,246,000
 
$
27,112,000
 
 
Utilization of the net operating loss carryover may be subject a substantial annual limitation if it should be determined that there has been a change in the ownership of more than 50 percent of the value of the Company's stock, pursuant to Section 382 of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating loss carryovers before utilization.
 
Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. As of June 30, 2017, it has been determined there are no uncertain tax positions likely to impact the Company.
 
The Partnership files tax returns as prescribed by the tax laws of the jurisdictions in which it operates and is subject to examination by federal, state and local jurisdictions, were applicable.
 
As of June 30, 2017, tax years beginning in fiscal 2011 remain open to examination by the major tax jurisdictions, and are subject to the statute of limitations