INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2018

Components of income (loss) before income taxes, after adjusting the income (loss) for non-controlling interests

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



	Year ended September 30,
	2018			2017
United States	$	(2,449,000	)	$	1,522,000
Canada	78,000			(1,431,000		)
	$	(2,371,000	)	$	91,000

Schedule of components of the income tax provision (benefit)

The components of the income tax benefit related to the above (loss) income are as follows:



	Year ended September 30,
	2018			2017
Current (benefit) provision:
United States – Federal	$	(429,000	)	$	—
United States – State
Before operating loss carryforwards	7,000			118,000
Benefit of operating loss carryforwards	—			(107,000		)
After operating loss carryforwards	7,000			11,000
	(422,000		)	11,000
Canadian	(560,000		)	(823,000		)
Total current	(982,000		)	(812,000		)
Deferred (benefit) provision:
United States – Federal	—			—
United States – State	(44,000		)	11,000
Canadian	425,000			(279,000		)
Total deferred	381,000			(268,000		)
	$	(601,000	)	$	(1,080,000	)

Summary of reconciliation between the reported income tax provision (benefit) and the amount computed by multiplying the loss by the U.S. federal tax rate

A reconciliation between the reported income tax benefit and the amount computed by multiplying the (loss) earnings attributable to Barnwell before income taxes by the U.S. federal tax rate of 21% and 35% for the years ended September 30, 2018 and 2017, respectively, is as follows:



	Year ended September 30,
	2018			2017
Tax (benefit) provision computed by applying statutory rate	$	(498,000	)	$	32,000
Impact of TCJA tax rate change on net deferred tax assets	5,817,000			—
Decrease in the valuation allowance	(6,044,000		)	(1,034,000		)
Impact of TCJA on alternative minimum tax credit carryovers	(429,000		)	—
Additional effect of the foreign tax provision on the total tax provision	592,000			254,000
Uncertain tax positions - lapse of statute	—			(369,000		)
U.S. state tax provision, before changes in uncertain tax positions and net of federal benefit	(36,000		)	22,000
Other	(3,000		)	15,000
	$	(601,000	)	$	(1,080,000	)

Schedule of tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:



	September 30,
	2018			2017
Deferred income tax assets:
Foreign tax credit carryover	$	2,455,000		$	3,062,000
Alternative minimum tax credit carryover	—			460,000
U.S. federal net operating loss carryover	7,208,000			9,773,000
Canadian net operating loss carryover	314,000			—
Tax basis of investment in land and residential real estate in excess of book basis	296,000			877,000
Property and equipment accumulated book depreciation and depletion in excess of tax under U.S. tax law	1,183,000			2,180,000
Liabilities accrued for books but not for tax under U.S. tax law	1,901,000			3,910,000
Liabilities accrued for books but not for tax under Canadian tax law	2,097,000			2,103,000
Other	916,000			1,091,000
Total gross deferred income tax assets	16,370,000			23,456,000
Less valuation allowance	(14,039,000		)	(21,158,000		)
Net deferred income tax assets	2,331,000			2,298,000
Deferred income tax liabilities:
Property and equipment accumulated tax depreciation and depletion in excess of book under Canadian tax law	(1,828,000		)	(914,000		)
Book basis of investment in land development partnerships in excess of tax basis	(818,000		)	(1,289,000		)
Other	—			(31,000		)
Total deferred income tax liabilities	(2,646,000		)	(2,234,000		)
Net deferred income tax (liability) asset	$	(315,000	)	$	64,000
Reported as:
Deferred income tax assets	—			300,000
Deferred income tax liabilities	(315,000		)	(236,000		)
Net deferred income tax (liability) asset	$	(315,000	)	$	64,000

Schedule of changes in unrecognized tax benefits

Below are the changes in unrecognized tax benefits.



	Year ended September 30,
	2018		2017
Balance at beginning of year	$	—	$	377,000
Effect of tax positions taken in prior years	—		—
Accrued interest related to tax positions taken	—		11,000
Settlements	—		(10,000		)
Lapse of statute	—		(369,000		)
Translation adjustments	—		(9,000		)
Balance at end of year	$	—	$	—

Summary of tax years, by jurisdiction, that remain subject to examination by taxing authorities

Included below is a summary of the tax years, by jurisdiction, that remain subject to examination by taxing authorities at September 30, 2018:



Jurisdiction	Fiscal Years Open
U.S. federal	2015 – 2017
Various U.S. states	2015 – 2017
Canada federal	2011 – 2017
Various Canadian provinces	2011 – 2017