Note 8 - Income Taxes

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 8. Income Taxes

During the three month periods ended September 30, 2016 and 2015, net income attributable to Avalon Holdings Corporation shareholders was $0.8 million and $0.5 million, respectively. During the nine month period ended September 30, 2016, net income attributable to Avalon Holdings Corporation shareholders was $0.3 million compared with a net loss attributable to Avalon Holdings Corporation shareholders of $0.5 million during the nine month period ended September 30, 2015. Avalon recorded a state income tax provision in both the three and nine month periods ended September 30, 2016 and 2015, which was related entirely to the waste management and brokerage operations. Excluding the effect of this state tax provision, Avalon’s overall effective tax rate was 0% in both the three and nine month periods ended September 30, 2016 and 2015. The overall effective tax rate is different than statutory rates primarily due to a change in the valuation allowance. Avalon’s income tax on the income (loss) before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.