Entity information:

(11) Income Taxes

 

Income tax expense for the years ended September 30 is as follows:

 

     2017      2016  
Current  $101,500   $10,000 
Deferred   598,547    1,066,466 
Total  $700,047   $1,076,466 

 

Actual income tax expense differs from the expected tax expense (computed by applying the federal corporate tax rate of 34% to income before income tax expense) as follows:

 

     2017      2016  
Expected federal tax expense  $952,229   $1,427,272 
Regulatory adjustment   (346,183)   (141,567)
Bargain purchase adjustment   —      (418,908)
Dividends received deduction   (10,517)   (11,888)
State tax expense (net of federal)   183,279    190,076 
Other, net   (78,761)   31,481 
Actual tax expense  $700,047   $1,076,466 

 

The tax effects of temporary differences that result in deferred income tax assets and liabilities at September 30 are as follows:

 

     2017      2016  
Deferred income tax assets:          
Unbilled revenue  $93,141   $48,327 
Deferred compensation reserve   582,664    556,653 
Post-retirement benefit obligations   2,799,467    2,678,585 
Inventories   16,941    20,054 
NOL carryforwards   3,220,127    2,852,220 
Other   945,067    971,815 
Total deferred income tax assets   7,657,407    7,127,654 
           
Deferred income tax liabilities:          
Property, plant and equipment, principally due to differences in depreciation   11,586,697    9,171,142 
Pension benefit obligations   1,880,268    1,830,050 
Comprehensive income   23,295    61,866 
Deferred rate expense and allocations   179,607    379,879 
Deficiency of gas adjustment clause revenues billed   467,944    138,153 
Intangibles   124,141    124,141 
Other   180,895    1,884,042 
Total deferred income tax liabilities   14,442,847    13,589,273 
           
Net deferred income tax (assets) liabilities  $6,785,440   $6,461,619 

 

The Holding Company has federal and New York State tax net operating loss carry forwards available of approximately $7.5 million for federal and $6.6 million for state as of September 30, 2017 that begin to expire at the end of the Holding Company’s fiscal 2025 tax year.

 

The accounting rules for uncertain taxes provide for the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recognized in the financial statements. The Holding Company has evaluated its tax positions and accordingly has not identified any significant uncertain tax positions. The Holding Company’s policy is to classify interest associated with uncertain tax positions as interest expense in the financial statements. Penalties are classified under other expense. The Holding Company files a consolidated federal income tax return and the Gas Company and Pike file separate state income tax returns in New York and Pennsylvania.