INCOME TAXES

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 11.     INCOME TAXES

For 2016, IOT had taxable income while ARL and TCI had taxable losses with the overall group having taxable income. For 2015, ARL, TCI and IOT had a combined net taxable loss and ARL recorded no current tax benefit or expense. For 2014, ARL, TCI and IOT had a combined net taxable loss and ARL recorded no current tax (benefit) or expense. The expense (benefit) in each year was calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory rate of 35%.

Current expense (benefit) is attributable to (dollars in thousands):

	2016			2015		2014
Income (loss) from continuing operations	$	46		$	517	$	(20,413	)
Income (loss) from discontinued operations		(1	)		483		20,413
The full 2013 tax (benefit) to ARL comes from MRHI	$	45		$	1,000	$	—

The Federal income tax expense differs from the amount computed by applying the corporate tax rate of 35% to the income before income taxes as follows (dollars in thousands):

	2016			2015			2014
Computed “expected” income tax (benefit) expense	$	(827	)	$	(800	)	$	14,061
Book to tax differences in gains on sale of property		(2,757	)		(3,744	)		(2,350	)
Book to tax differences of depreciation and amortization		(497	)		(193	)		(1,415	)
Other book to tax differences		4,126			5,737			(10,296	)
Total	$	45		$	1,000		$	—
Alternative minimum tax	$	—		$	—		$	—

Deferred income taxes reflect the tax effects of temporary timing differences between carrying amounts of assets and liabilities reflected on the financial statements and the amounts used for income tax purposes. ARL’s tax basis in its net assets differs from the amount at which its net assets are reported for financial statement purposes, principally due to the accounting for gains and losses on property sales, and depreciation on owned properties. The tax effects of temporary differences and net operating loss carry forwards that give rise to the deferred tax assets are presented below (amounts in thousands):

	2016			2015			2014
Net operating losses	$	64,048		$	67,112		$	74,357
AMT credits		2,418			2,751			2,201
Basis difference of:
Real estate holdings and equipment		(1,580	)		(11,197	)		10,337
Notes receivable		10,756			6,475			6,946
Investments		(13,775	)		(14,966	)		(14,950	)
Notes payable		2,700			3,455			8,189
Deferred gains		21,462			19,868			18,086
Total		86,029			73,498			105,166
Deferred tax valuation allowance		(86,029	)		(73,498	)		(105,166	)
Net deferred tax asset	$	—		$	—		$	—

At December 31, 2016, 2015 and 2014 ARL had a net deferred tax asset due to tax deductions available to it in future years. However, as management could not determine that it was more likely than not that ARL would realize the benefit of the deferred tax asset, a 100% valuation allowance was established.

ARL has prior tax net operating losses and capital loss carryforwards of approximately $61.0 million expiring through the year 2033. The alternative minimum tax credit balance decreased in 2016 to approximately $2.4 million. The credit has no expiration date.

ARL is subject to routine audits by taxing jurisdictions; however, there are currently no audits in progress for any tax periods. Management believes ARL is no longer subject to income tax examinations for years prior to 2012.