INCOME TAXES

The components of income (loss) before income taxes, after adjusting the income (loss) for non-controlling interests, are as follows:



	Three months ended June 30,						Nine months ended June 30,
	2015			2014			2015			2014
United States	$	1,684,000		$	(710,000	)	$	1,269,000		$	(2,949,000	)
Canada	(853,000		)	705,000			(2,622,000		)	2,121,000
	$	831,000		$	(5,000	)	$	(1,353,000	)	$	(828,000	)

The components of the income tax provision (benefit) are as follows:



	Three months ended June 30,						Nine months ended June 30,
	2015			2014			2015			2014
Current	$	(289,000	)	$	344,000		$	(636,000	)	$	887,000
Deferred	149,000			(133,000		)	796,000			(225,000		)
	$	(140,000	)	$	211,000		$	160,000		$	662,000

As a result of significant declines in prices, funds available for oil and natural gas capital expenditures are projected to be minimal in the near term and thus Barnwell's ability to replace production and abate declining reserves has been significantly restricted as compared to the recent past. Accordingly, Barnwell has determined that it is not more likely than not that all of our oil and natural gas deferred tax assets under Canadian tax law are realizable. Included in the deferred income tax expense for the three and nine months ended June 30, 2015 was $78,000 and $863,000, respectively, for the valuation allowance necessary for the portion of Canadian tax law deferred tax assets that may not be realizable. There was no such valuation allowance recorded in the same periods of the prior year.

On June 29, 2015, the Canadian province of Alberta enacted legislation that increased the provincial corporate tax rate from 10% to 12% effective July 1, 2015, bringing the total Canadian statutory tax rate applicable to our business from 28.75% to 30.65%. The impact of the enactment of $92,000 was recorded as a charge to income taxes during the quarter ended June 30, 2015.

Consolidated taxes do not bear a customary relationship to pretax results due primarily to the fact that the Company is taxed separately in Canada based on Canadian source operations and in the U.S. based on consolidated operations, Canadian income taxes are not estimated to have a future benefit as foreign tax credits or deductions for U.S. tax purposes, and U.S. consolidated net operating losses and other deferred tax assets under U.S. tax law are not estimated to have any future U.S. tax benefit. In addition, consolidated taxes in the current year periods include the aforementioned valuation allowance for a portion of deferred tax assets under Canadian tax law.