INCOME TAXES

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



	Three months ended June 30,						Nine months ended June 30,
	2016			2015			2016			2015
United States	$	2,201,000		$	1,684,000		$	793,000		$	1,269,000
Canada	(1,498,000		)	(853,000		)	(3,564,000		)	(2,622,000		)
	$	703,000		$	831,000		$	(2,771,000	)	$	(1,353,000	)

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



	Three months ended June 30,						Nine months ended June 30,
	2016			2015			2016			2015
Current	$	(159,000	)	$	(289,000	)	$	(527,000	)	$	(636,000	)
Deferred	87,000			149,000			(2,000		)	796,000
	$	(72,000	)	$	(140,000	)	$	(529,000	)	$	160,000

In the second quarter of fiscal 2015, Barnwell determined that it was not more likely than not that all of our oil and natural gas deferred tax assets under Canadian tax law were realizable due to significant declines in oil and natural gas prices, which in turn restricted funds available for the oil and natural gas capital expenditures needed to replace production and abate declining reserves. As a result the Company recorded a valuation allowance for the portion of Canadian tax law deferred tax assets related to asset retirement obligations that may not be realizable. The change in the valuation allowance included in the deferred income tax provision (benefit) for the three and nine months ended June 30, 2016, was a charge of $235,000 and $373,000, respectively. The change in the valuation allowance included in the deferred income tax provision for the three and nine months ended June 30, 2015 was a charge of $78,000 and $863,000, respectively.

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 include the aforementioned valuation allowances for a portion of deferred tax assets under Canadian tax law.