Income Taxes (Notes)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The income tax expense on income from continuing operations for each of the three years in the period ended December 31, 2013 consisted of the following (in millions):

	2013			2012			2011
Current:
Federal	$	17.1		$	4.3		$	8.0
State	2.1			0.8			2.1
Current	19.2			5.1			10.1
Deferred:
Federal	(8.0		)	(10.5		)	(6.3		)
State	(2.7		)	(2.2		)	(2.8		)
Deferred	(10.7		)	(12.7		)	(9.1		)
Total continuing operations tax expense (benefit)	$	8.5		$	(7.6	)	$	1.0

Income tax expense for 2013, 2012, and 2011 differs from amounts computed by applying the statutory federal rate to income from continuing operations before income taxes for the following reasons (in millions):

	2013			2012			2011
Computed federal income tax expense	$	8.3		$	—		$	0.4
State income taxes	1.0			(0.3		)	(0.6		)
Non-deductible transaction costs	1.6			1.7			0.8
Charitable contribution	(0.2		)	(3.5		)	—
Solar tax credits	—			(2.9		)	—
Other—net	(2.2		)	(2.6		)	0.4
Income tax expense (benefit)	$	8.5		$	(7.6	)	$	1.0

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 of each year are as follows (in millions):

	2013		2012
Deferred tax assets:
Benefit plans	$	23.6	$	32.2
Capitalized costs	24.1		17.8
Charitable contribution	1.5		4.0
Basis differences for property and equipment	—		3.6
Joint ventures and other investments	15.0		5.5
Impairment and amortization	0.5		4.1
Insurance and other reserves	6.7		5.4
Solar credit	3.5		2.9
Other	5.4		0.8
Total deferred tax assets	80.3		76.3
Deferred tax liabilities:
Tax-deferred gains on real estate transactions	225.4		211.4
Basis differences for property and equipment	23.4		—
Straight-line rental income and advanced rent	7.2		8.1
Other	5.2		1.9
Total deferred tax liabilities	261.2		221.4
Net deferred tax liability	$	180.9	$	145.1

The basis difference for property and equipment changed from a deferred tax assets in 2012 to a deferred tax liability in 2013 due to additional basis differences associated with property included in the Grace Pacific acquisition, partially offset by property included in the Kailua Portfolio acquisition.

The Company’s income taxes payable has been reduced by the tax benefits from share-based compensation. The Company receives an income tax benefit for exercised stock options calculated as the difference between the fair market value of the stock issued at the time of exercise and the option exercise price, tax effected. The Company also receives an income tax benefit for restricted stock units when they vest, measured as the fair market value of the stock issued at the time of vesting, tax effected. The net tax benefits from share-based transactions were $1.6 million and $4.3 million for 2013 and 2012, respectively, and the portion of the tax benefit related to the excess of the amount reported as the tax deduction over expense was reflected as an increase to equity in the consolidated statements of equity.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in millions):

Balance at January 1, 2011	$	2.5
Additions for tax positions of prior years	—
Additions for tax positions of current year	—
Reductions for tax positions of prior years	—
Reductions for lapse of statute of limitations	—
Balance at December 31, 2011	2.5
Additions for tax positions of prior years
Additions for tax positions of current year
Reductions for tax positions of prior years	(2.5		)
Reductions for lapse of statute of limitations
Balance at December 31, 2012	—
Additions for tax positions of prior years	—
Additions for tax positions of current year	—
Reductions for tax positions of prior years	—
Reductions for lapse of statute of limitations	—
Balance at December 31, 2013	$	—

The Company is included in the consolidated tax return of Matson, Inc. (formerly Alexander & Baldwin Holding, Inc.) for results occurring prior to June 30, 2012. Subsequent to June 30, 2012, the Company began reporting as a separate taxpayer. The current and deferred income tax expense recorded in the consolidated financial statement for the 2011 year and the short period ended June 30, 2012 has been determined by applying the provisions of ASC 740 as if the Company were a separate taxpayer.

Upon Separation, the Company’s unrecognized tax benefits were reflected on Matson Inc.’s (“Matson”) financial statements because Matson is considered the successor parent to the former Alexander & Baldwin, Inc. affiliated tax group. In connection with the Separation, the Company entered into a Tax Sharing Agreement with Matson. As of December 31, 2013, $0.3 million remained as a liability for the indemnity to Matson in the event the Company’s pre-Separation unrecognized tax benefits are not realized. As of December 31, 2013, the Company has not identified any material unrecognized tax positions.

On September 13, 2013 the U.S. Treasury Department released final income tax regulations on the deduction and capitalization of expenditures related to tangible property. These final regulations apply to tax years beginning on or after January 1, 2014. Several of the provisions within the regulations will require a tax accounting method change to be filed with the IRS resulting in a cumulative effect adjustment. To account for the adoption of these regulations, $7.6 million was reclassified from deferred income taxes (non-current) to other non-current liabilities in 2013.

The company is subject to taxation by the United States and various state and local jurisdictions. As of December 31, 2013, the Company’s tax year 2012 is open to examination by the tax authorities. In addition, tax years 2010, 2011 and 2012, for which the Company was included in the consolidated tax group with Matson, are open to examination by the tax authorities in the company’s material jurisdictions. In addition, the 2009 tax year is also open to examination by California. The Company is not currently under examination by any tax authorities.