Note 11: Income Taxes

 

The provision for income taxes includes these components:

 

 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. Among other significant changes to the tax code, the new law lowered the federal corporate tax rate from 34% to 21% beginning in 2018. As a result, the Company revalued its net deferred tax asset at the new 21% rate. Due to this revaluation, the Company recorded a $401,000 charge to income tax expense for the year ended December 31, 2017.

 

A reconciliation of the income tax expense at the statutory rate to the Company’s actual income tax expense is shown below:

 

 

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

 

 

The deferred tax asset is considered to be realizable based on our analysis of the evidence available. In performing this analysis, we consider all evidence currently available, both positive and negative, in determining whether based on the weight of that evidence, the deferred tax asset will be realized. 

 

The Company does not have any beginning and ending unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. There were no interest and penalties recorded in the income statement or accrued for the year ending December 31, 2017 related to unrecognized tax benefits.

 

The Company files a consolidated U.S. federal income tax return, Kentucky income and franchise and Tennessee income and franchise tax returns.  These returns are subject to examination by taxing authorities for all years after 2013.

 

As of December 31, 2017 and 2016, income taxes payable were $5,000 and $183,000, respectively, and are included in other assets on the Consolidated Balance Sheet.