INCOME TAXES

9 Months Ended

Sep. 30, 2020

INCOME TAXES

INCOME TAXES

11. INCOME TAXES

The Corporation has reported deferred tax assets of $1.758 million at September 30, 2020.

A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred tax asset will not be realized.  The Corporation, as of September 30, 2020 had a net operating loss carryforwards for tax purposes of approximately $10.2 million. As a result of the repeal of the corporate alternative minimum tax in the Tax Cuts and Jobs Act, any outstanding alternative minimum tax credits are believed to be utilized or refundable as of September 30, 2020. There are $1.3 million of alternative minimum tax credits, classified as a current tax receivable as of September 30, 2020.  A portion of the NOL and credit carryforwards are subject to the limitations for utilization as set forth in Section 382 of the Internal Revenue Code.  The annual limitation is $2.0 million for the NOL and the equivalent value of tax credits, which is approximately $.420 million.  These limitations for use were established in conjunction with the recapitalization of the Corporation in December 2004.  The Corporation will continue to evaluate the future benefits from these carryforwards in order to determine if any adjustment to the deferred tax asset is warranted.

The Corporation recognized a federal income tax expense of approximately $2.613 million for the nine months ended September 30, 2020 and $2.806 million for the nine months ended September 30, 2019.