16.	INCOME TAXES

December 22, 2017,

H.R.

originally known as the Tax Cuts and Jobs Act, (“TCJA”) was enacted. The TCJA provides for sweeping changes in United States tax rates and tax provisions which affected the Company as of

December 31, 2017

and for periods beginning after

January 1, 2018.

Effective for years beginning after

December 31, 2017,

the maximum corporate tax rate decreased to a flat rate of

21%.

This decrease in the tax rate resulted in the remeasurement of existing deferred tax assets and liabilities as of the enactment date and resulted in a decrease to existing net deferred tax assets of

$3,851.

In addition, the TCJA provides for existing Federal AMT tax credits to be refunded from

2018

through

2021.

Accordingly, as of

December 31, 2017,

the Company reclassified AMT tax credits of

$8,913

from non-current deferred tax assets to non-current long-term tax receivables. The federal AMT credits were reduced by

$569

related to the applicable budget sequestration rate of

6.6%.

The Company evaluated the TCJA and concluded that all information was available to complete the accounting for the effects of the tax reform in the

fourth

quarter of

2017.

In the

first

quarter of

2018,

the Company recorded an additional benefit of

$703

associated with the effects of the TCJA. In the

fourth

quarter of

2018,

the Company reversed the federal AMT credit sequestration reduction of

$569

recorded in

2017

based on Internal Revenue Service guidance published in

January 2019,

resulting in a corresponding reduction in the provision for income taxes. As of

December 31, 2018,

the Company had reclassified

$5,087

of existing AMT tax credits from non-current tax receivable to current tax receivable.

Consolidated income before income tax was as follows:

		2019				2018
Income before income tax		$	7,600			$	11,029

The income tax provision for the years ended

December 31, 2019

and

2018

was comprised of the following:

	2019			2018
Current:
Federal income tax	$	-		$	(732	)
State income tax		(60	)		6
Total current benefit		(60	)		(726	)
Deferred:
Federal, excluding operating loss carry forwards		(175	)		(1,123	)
State, excluding operating loss carry forwards		(86	)		(31	)
Change in valuation allowance		(20	)		(42	)
Tax benefit of operating loss carry forwards:
Federal		2,329			2,771
State		777			1,192
Total deferred expense		2,825			2,767
Total income tax expense	$	2,765		$	2,041

The following table provides a reconciliation of income tax expense at the Federal statutory rate of

21%

to the recorded income tax expense for the years ended

December 31, 2019

and

2018:

	2019			2018
Computed federal income taxes at the statutory rate	$	1,616		$	2,335
Expense (benefit) in tax resulting from:
State income taxes (net of Federal benefit)		731			824
Enacted rate change		-			(703	)
Alternative minimum tax sequestration		-			(569	)
Other		415			236
Stock-based compensation		23			(40	)
Change in valuation allowance		(20	)		(42	)
Total income tax expense	$	2,765		$	2,041

Income tax expense was charged to the statement of comprehensive income and statement of stockholders’ equity as follows:

	2019			2018
Statement of comprehensive income:
Income tax expense	$	2,765		$	2,041
Other comprehensive income (loss), tax effect	$	(238	)	$	(110	)

The Company accounts for income taxes under the asset-liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are provided when it is “more likely than

not”

that the benefits of existing deferred tax assets will

not

be realized in a future period. As of

December 31, 2019

and

2018,

the Company had valuation allowances on certain state net operating loss carryforwards of

$142

and

$162,

respectively. As of

December 31, 2019

and

2018,

the change in the valuation allowance was $(

) and $(

), respectively. At

December 31, 2019,

it is more likely than

not

that the results of future operations will generate sufficient taxable income to realize existing deferred tax assets, other than the state net operating loss carryforwards noted above. Therefore,

additional valuation allowance is necessary.

Significant components of the Company’s deferred tax assets and liabilities as of

December 31, 2019

and

2018,

respectively, are as follows:

	2019			2018
Deferred tax assets:
Net operating loss carry forwards	$	13,635		$	16,742
Operating lease liabilities		23,374			-
Deferred GCI capacity revenue		8,839			9,428
Reserves and accruals		8,700			8,947
Intangibles and goodwill		855			944
Fair value on interest rate swaps		82			-
Pension liability		1,054			1,031
Allowance for doubtful accounts		1,314			1,118
Other		222			-
Total deferred tax assets		58,075			38,210
Valuation allowance		(142	)		(162	)
Deferred tax assets after valuation allowance		57,933			38,048
Deferred tax liabilities:
Property, plant and equipment		(37,152	)		(37,320	)
Operating lease right of use assets		(23,011	)		-
Fair value on interest rate swaps		-			(130	)
Revenue contract assets		(2,173	)		(2,407	)
Other		-			(8	)
Total deferred tax liabilities		(62,336	)		(39,865	)
Net deferred tax liability	$	(4,403	)	$	(1,817	)

As of

December 31, 2019,

the Company has available Federal alternative minimum tax credits of

$2,155

and which are classified as a non-current income tax receivable. As of

December 31, 2019,

the Company has available Federal and state net operating loss carry forwards of

$53,728

and

$31,977,

respectively, which have various expiration dates beginning in

2031

through

2037.

The Company files consolidated income tax returns for Federal and state purposes in addition to separate tax returns of certain subsidiaries in multiple state jurisdictions. As of

December 31, 2019,

the Company is

not

under examination by any income tax jurisdiction. The Company is

longer subject to examination in the United States for years prior to

2016.

The Company accounts for income tax uncertainties using a threshold of “more-likely-than-

not”

in accordance with the provisions of ASC

740,

“Income Taxes.” As of

December 31, 2019,

the Company has reviewed all of its tax filings and positions taken on its returns and has

not

identified any material current or future effect on its consolidated results of operations, cash flows or financial position. As such, the Company has

not

recorded any tax, penalties or interest on tax uncertainties. It is Company policy to record any interest on tax uncertainties as a component of income tax expense.