INCOME TAXES

6 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

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   March 31,						Six months ended   March 31,
	2015			2014			2015			2014
United States	$	(179,000	)	$	(1,389,000	)	$	(415,000	)	$	(2,239,000	)
Canada	(1,449,000		)	1,617,000			(1,769,000		)	1,416,000
	$	(1,628,000	)	$	228,000		$	(2,184,000	)	$	(823,000	)

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

	Three months ended   March 31,						Six months ended   March 31,
	2015			2014			2015			2014
Current	$	(350,000	)	$	672,000		$	(347,000	)	$	543,000
Deferred	739,000			(159,000		)	647,000			(92,000		)
	$	389,000		$	513,000		$	300,000		$	451,000

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. As such, during the quarter ended March 31, 2015, a valuation allowance of $785,000, which increased deferred income tax expense, was recorded for the portion of Canadian tax law deferred tax assets related to asset retirement obligations that may not be realizable.

Consolidated taxes do not bear a customary relationship to pretax results due primarily to the fact that Canadian taxable income is not sheltered by U.S. source losses, Canadian income taxes are not estimated to have a current or future benefit as foreign tax credits or deductions for U.S. tax purposes, and U.S. consolidated net operating losses are not estimated to have any future U.S. tax benefit prior to expiration. 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.