Note 8 - Income Taxes

12 Months Ended

Dec. 31, 2015

(8)	INCOME TAXES

The components of the Partnership’s gross income tax expense (benefit) for the years ended December 31, 2015 and 2014 were as follows (in thousands):

	2015		2014
Currently payable	$	114	$	-
Deferred		14		(16	)
Gross income tax expense (benefit)	$	128	$	(16	)

The provision for income taxes equates to the 3.5% federal tax rate applied to gross income (revenues less cost of revenues) for the years ended December 31, 2015 and 2014.

The components of the net deferred income tax liability reported on the consolidated balance sheets as of December 31, 2015 and 2014 are as follows (in thousands):

	2015			2014
Deferred tax assets:
Intangible assets	$	111		$	115
Inventory		31			31
Other		-			3
Gross deferred tax assets		142			149
Deferred income tax liabilities:
Land, orchards, and equipment		(1,160	)		(1,153	)
Other		-			-
Gross deferred tax liabilities		(1,160	)		(1,153	)
Net deferred income tax liabilities	$	(1,018	)	$	(1,004	)

Royal is subject to taxation as a C Corporation at the 34% federal tax rate and 6.9% blended state tax rate on the corporation’s taxable income (loss). As a result of the losses incurred by Royal for the years ended December 31, 2015 and 2014, the Partnership recorded a deferred tax asset of $3 million and $2.4 million, respectively, against which the Partnership recorded a valuation allowance equal to 100% of the deferred tax asset due to the uncertainty regarding future realization.