Note 16 - Income Tax (Benefit) Provision

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

16 ) Income tax (benefit) provision

The following table summarizes the income tax provision (benefit):

	2019			2018			2017
Income before taxes - U.S.	$	79,795		$	60,177		$	16,649
Income tax provision:
Federal
Current		(2,811	)		7,105			6,185
Deferred		(4,006	)		(1,389	)		(12,632	)
State and other
Current		(430	)		1,167			610
Deferred		(1,139	)		136			(1,025	)
Total	$	(8,386	)	$	7,019		$	(6,862	)

Differences between the income tax (benefit) provision computed using the U.S. federal statutory income tax rate were as follows:

	2019		2018		2017
Amount computed using the statutory rate	21.0%		21.0%		35.0%
Section 199 manufacturing deduction	-		-		(0.5%	)
Small Agri-biodiesel Producer Tax Credit	(3.0%	)	(1.6%	)	-
Federal BTC benefit	(23.4%	)	(12.9%	)	-
State BTC benefit	(5.8%	)	(3.3%	)	-
Credit for increasing research activities	(0.2%	)	(0.2%	)	(0.8%	)
Dividends received deduction	(0.4%	)	(0.6%	)	(5.2%	)
State income taxes, net	4.0%		4.2%		2.8%
State research credits	(0.9%	)	-		-
State rate change impact	(1.6%	)	-		-
Tax expense recorded as an increase in unrecognized tax benefit	-		5.3%		1.1%
Tax Cuts and Jobs Act of 2017 impact	-		-		(72.5%	)
Other	(0.2%	)	(0.2%	)	(1.1%	)
Income tax (benefit) provision	(10.5%	)	11.7%		(41.2%	)

The income tax benefit in

2019

was (

10.5%

) or (

$8,386

) as compared to an income tax provision of

11.7%

or

$7,019

in

2018

and an income tax benefit of (

41.2%

) or (

$6,862

) in

2017.

The Company’s effective tax rate for the year

2019

reflects the positive effect of the reinstatement of certain tax credits and incentives for

2018

and

2019,

the most significant of which was the BTC and Small Agri-biodiesel Producer Tax Credit. The BTC and Small Agri-biodiesel Producer Tax Credit was retroactively extended for

2018

and

2019

on

December 20, 2019

and further extended through

December 31, 2022.

This tax benefit was recorded in the Company’s

fourth

quarter

2019

results. See Note

3

for a discussion of the impact of the BTC for the years ended

December 31, 2019,

2018,

and

2017.

The

2019

effective tax rate was also favorably impacted by the Company being granted a retroactive research and development credit for a prior year in a state where it does significant business. Additionally, the Company’s effective tax rate reflects a

one

-time benefit from state legislation enacted during the year which applies a lower tax rate to future reversals of deferred tax liabilities.

The Company’s effective tax rate for the year

2018

reflects an uncertain tax position on prior year income of

$2,728,

net (

$2,804,

gross) plus interest of

$448

in the

fourth

quarter of

2018.

Partially reducing provision for income taxes was the benefit of the reinstatement of certain tax credits and incentives for

2018,

the most significant of which was the BTC and Small Agri-biodiesel Producer Tax Credit. The BTC and Small Agri-biodiesel Producer Tax Credit was retroactively extended for

2017

(but,

not

beyond

December 31, 2017)

on

February 9, 2018.

The Company’s effective tax rate for the year

2017

reflects a

one

-time benefit from The Tax Cuts and Jobs Act of

2017

(“The Act”). The Act provided for a federal tax rate from

35%

to

21%

effective

January 1, 2018.

The Company recognized a

one

-time

$12,066

income tax benefit from anticipated lower tax rates on future reversals of deferred tax liabilities.

The significant components of deferred tax assets and liabilities were as follows as of

December 31:

	2019			2018
Deferred tax assets
Compensation	$	267		$	30
Inventory reserves		650			458
Self-insurance		103			63
Asset retirement obligation		199			209
Deferred revenue		4,427			5,015
Federal net operating loss carryforwards		3,121			1
State net operating loss carryforwards		363			-
Accrued expenses		1,684			1,653
Stock-based compensation		41			108
State credit carryforwards		343			-
Derivative instruments		56			-
Other		-			130
Total deferred tax assets		11,254			7,667
Deferred tax liabilities
Available-for-sale securities, unrealized gains		(79	)		-
Derivative instruments		-			(86	)
LIFO inventory		(2,860	)		(3,389	)
Depreciation		(19,891	)		(22,010	)
Marketable securities, unrealized gains		(1,334	)		-
Other		(55	)		(208	)
Total deferred tax liabilities		(24,219	)		(25,693	)
Net deferred tax liabilities	$	(12,965	)	$	(18,026	)

Based on technical guidance from Internal Revenue Service, the Company excludes the portion of the BTC

not

used to satisfy excise tax liabilities from income.

Net operating loss carryforwards reflect losses generated in

2019

for federal and state income tax purposes. The federal carryforward of

$3,121

is available to reduce future federal taxable income over an indefinite period. Utilization of this carryforward is limited to

80%

of taxable income in any given year. The state loss carryforwards of

$363

have varying lives, with the majority expiring in

2024.

The following table summarizes the Company’s unrecognized tax positions.

	2019			2018		2017
Balance at January 1	$	2,804		$	-	$	2,056
Increases to tax positions taken in the current year		-			-		-
Increases to tax positions taken in a prior year		-			2,804		-
Decrease due to resolution of tax positions taken in a prior year		(2,804	)		-		(2,056	)
Balance at December 31	$	-		$	2,804	$	-

The Company does

not

expect its unrecognized tax positions to change significantly over the next

12

months.

The Company records interest and penalties, net, as a component of income tax (benefit) provision and had accrued interest and penalties of (

$557

) and

$681

for

December 31, 2019

and

2018,

respectively. Liabilities for accrued interest and tax penalties on unrecognized tax benefits were

$0

and

$598

at

December 31, 2019

and

2018,

respectively.

The Company and its subsidiaries file tax returns in the U.S. federal jurisdiction and with various state jurisdictions. In general, the Company is subject to U.S., state, and local examinations by tax authorities from

2014

forward. The Internal Revenue Service concluded its audit of the Company’s

2014

through

2016

income tax returns in the

third

quarter of

2019.

Any unrecognized tax benefits were realized at that time.