INCOME TAXES

9 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

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

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
United States	$	(271,000)	$	4,770,000	$	1,637,000	$	5,261,000
Canada	2,877,000		399,000		4,344,000		(267,000)
	$	2,606,000	$	5,169,000	$	5,981,000	$	4,994,000

The components of the income tax provision are as follows:

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Current	$	126,000	$	40,000	$	378,000	$	123,000
Deferred	(51,000)		151,000		(53,000)		165,000
	$	75,000	$	191,000	$	325,000	$	288,000

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, and essentially all deferred tax assets, net of relevant offsetting deferred tax liabilities, are not estimated to have a future benefit as tax credits or deductions. Income from our non-controlling interest in the Kukio Resort Land Development Partnerships is treated as non-unitary for state of Hawaii unitary filing purposes, thus unitary Hawaii losses provide limited sheltering of such non-unitary income. Income from our investment in the Oklahoma oil venture is 100% allocable to Oklahoma and Barnwell receives no benefit from consolidated or unitary losses and, therefore, is subject to Oklahoma state taxes.

In addition, net operating loss carryforwards, all of which had a full valuation allowance at the end of the previous fiscal year, are being partially utilized in the current year periods to offset taxable income in the U.S. federal and Canadian jurisdictions. The net operating loss carryforwards beyond the current year’s utilization continue to have a full valuation allowance as realization of their benefit is not more likely than not.

Included in the current income tax provision for the three and nine months ended June 30, 2022 is a $61,000 expense for income tax penalties and interest thereon for the non-filing of IRS Form 8858 in each of our U.S. federal income tax returns for fiscal years 2019, 2020 and 2021. The Company is in the process of amending its U.S. federal tax returns to include Form 8858 and plans to request abatement of the potential penalties and interest. There was no such expense included in the current income tax provision for the three and nine months ended June 30, 2021.