Note 11 – Income Taxes

Income tax position differs from the amount computed by applying the federal statutory rate to pre-tax income or loss as demonstrated in the table below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014

Tax (benefit) expense at statutory rate of 34%	$	(812,303)	$	(762,292)	$	1,829,945	$	1,975,507
State income tax (benefit), net of Federal tax benefit (expense)		(63,298)		(75,456)		221,136		195,546
Amortization of deferred investment tax credits		(5,265)		(5,265)		(10,530)		(10,530)
Adjustment to tax return filed		-		-		-		40,914
Other		(9,067)		29,601		(12,837)		19,006

Total income tax (benefit) expense		(889,933)		(813,412)		2,027,714		2,220,443
Less: income tax from discontinued operations		122,500		36,431		373,474		310,808

Income tax (benefit) expense from continuing operations	$	(1,012,433)	$	(849,843)	$	1,654,240	$	1,909,635

The “Adjustment to tax return filed” line above for the six months ended June 30, 2014 includes an income tax adjustment of $40,914 related to the correction of income tax items related to 2012 recorded during the six months ended June 30, 2014.

The Company files its income tax returns on a consolidated basis. Rate-regulated operations record cumulative increases in deferred taxes as income taxes recoverable from customers. The Company uses the deferral method to account for investment tax credits as required by regulatory commissions. Deferred income taxes are determined using the asset and liability method, under which deferred tax assets and liabilities are measured based upon the temporary differences between the financial statement and income tax basis of assets and liabilities, using current tax rates.

Tax positions must meet a more-likely-than-not recognition threshold to be recognized. The Company has no unrecognized tax benefits that would have a material impact to the Company’s financial statements for any open tax years. No adjustments were recognized for uncertain tax positions for the three and six months ended June 30, 2015 and 2014.

The Company recognizes interest and penalties related to unrecognized tax benefits in operating expense. As of June 30, 2015 and December 31, 2014, there were no unrecognized tax benefits nor interest or penalties accrued related to unrecognized tax benefits. For the three and six months ended June 30, 2015 and 2014, the Company did not recognize any interest or penalties related to unrecognized tax benefits.

The Company, or one or more of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The tax years after 2011 for federal and state returns remain open to examination by the major taxing jurisdictions in which the Company operates.