INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES

INCOME TAXES

(8) INCOME TAXES

The components of the Partnership’s gross income tax expense (credit) for the years ended December 31, 2012, 2011 and 2010 were as follows (000’s):

	2012			2011			2010
Currently payable	$	138		$	115		$	44
Deferred	(12		)	(16		)	(23		)
Gross income tax expense (credit)	$	126		$	99		$	21

The provision (credit) for income taxes equates to the 3.5% federal tax rate applied to gross income (net revenues less cost of goods sold) for the years ended December 31, 2012, 2011 and 2010.

The components of the net deferred tax liability reported on the consolidated balance sheets as of December 31, 2012 and 2011 are as follows (000’s):

	2012			2011
Deferred tax assets:
Intangible assets	$	115		$	115
Inventory	27			27
Gross deferred tax assets	142			142
Deferred tax liabilities:
Land, orchards, and equipment	(1,174		)	(1,186		)
Other	(7		)	(7		)
Gross deferred tax liabilities	(1,181		)	(1,193		)
Net deferred tax liabilities	$	(1,039	)	$	(1,051	)

For 2012, Royal is subject to taxation as a C Corporation at the 34% federal tax rate and 6.4% state tax rate on the corporation’s taxable income (loss).  As a result of the loss incurred by Royal, the Partnership recorded a deferred tax asset of $412,000, against which the Partnership recorded a valuation allowance equal to 100% of the deferred tax asset due to the uncertainty regarding future realization.