16.  Income Taxes



ASC 740 requires the effects of tax law and rate changes be reflected as a component of tax expense from continuing operations. Due to the enactment of the Tax Cuts and Jobs Act on December 22, 2017, Juniata’s future maximum corporate tax rate was lowered from 34% to 21%, thereby decreasing the future tax benefit of its net deferred tax asset by 13%. Though the reduced rate will provide tax savings to Juniata in future periods, the reduction resulted in a write-downs of Juniata’s net deferred tax assets, which was previously valued based upon the projection of a 34% future tax rate. As a result, a non-cash charge of $416,000 was included in the 2017 expense for income taxes. Offsetting the tax expense was the effect of tax credits for Juniata’s investment in two low-income housing partnerships amounting to $722,000 in 2017,  $572,000 in 2016 and $570,000 in 2015. Tax credits associated with phase I will continue through 2023.  Phase II credits were initiated in the second half of 2017 and will run through 2027. The tax credits are included in the tax expense line item on the Consolidated Statements of Income.



The components of income tax expense for the three years ended December 31 were:







A reconciliation of the statutory income tax expense computed at 34% to the income tax expense included in the consolidated statements of income follows:





Deductible temporary differences and taxable temporary differences gave rise to a net deferred tax asset for the Company as of December 31, 2017 and 2016.  The components giving rise to the net deferred tax asset are detailed below:





The Company has concluded that the deferred tax assets are realizable (on a more likely than not basis) through the combination of future reversals of existing taxable temporary differences, certain tax planning strategies and expected future taxable income.



It is the Company’s policy to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income. No significant income tax uncertainties were identified as a result of the Company’s evaluation of its income tax position. Therefore, the Company recognized no adjustment for unrecognized income tax benefits for the years ended December 31, 2017, 2016 and 2015. The Company is no longer subject to examination by taxing authorities for years before 2014.  Tax years 2014 through the present, with limited exception, remain open to examination.