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KIMLEY‐HORN AND ASSOCIATES, INC.
<br />NOTES TO THE FINANCIAL STATEMENTS
<br />
<br />
<br />DECEMBER 31, 2018 AND 2017
<br />(SEE INDEPENDENT ACCOUNTANT’S REVIEW REPORT)
<br />
<br />
<br />15
<br />Note 9—Income taxes (continued)
<br />
<br />The components of deferred income taxes as of December 31, 2018 and 2017 are as follows:
<br />
<br />2018 2017
<br />Deferred tax assets:
<br />Net operating loss and other tax carryforwards - state and federal 684$ 644$
<br />Temporary differences for reimbursed expenses 222,782 199,476
<br />Post-retirement health benefits 141,759 175,455
<br />Foreign tax credit - 91,767
<br />Federal research and development tax credit - 1,183,237
<br />State research and development tax credit - 115,136
<br />Goodwill amortization 84,804 -
<br />Accrual to cash adjustment 683,059 -
<br /> Total deferred tax assets 1,133,088 1,765,715
<br />Deferred tax liabilities:
<br />Accrual to cash adjustment (1,087) (4,100,888)
<br />Depreciation (4,519,211) (2,705,915)
<br /> Total deferred tax liabilities (4,520,298) (6,806,803)
<br /> Net deferred tax liabilities (3,387,210)$ (5,041,088)$
<br />No valuation allowance for deferred tax assets was required as of December 31, 2018 and 2017. Management
<br />believes it is more likely than not that the deferred tax assets will be recovered by future taxable income.
<br />
<br />A reconciliation of the expected income tax expense (benefit) at the parent’s federal statutory rate of 21% and
<br />35% as of December 31, 2018 and 2017, respectively, and income tax expense (benefit) for the years ended
<br />December 31, 2018 and 2017 are as follows:
<br />
<br />2018 2017
<br />Expected income tax expense at statutory rate 4,846,637$ 6,615,845$
<br />State income taxes, net of federal benefit 1,631,504 676,567
<br />Research and development tax credit (1,797,947) (1,459,541)
<br />Permanent differences 1,363,010 692,107
<br />Change in uncertain tax positions - (437,927)
<br />Foreign items (30,748) (119,953)
<br />Federal and state rate revaluation - (3,856,840)
<br />Other 10,775 3,504
<br />6,023,231$ 2,113,762$
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