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KIMLEY‐HORN AND ASSOCIATES, INC.
<br />NOTES TO THE FINANCIAL STATEMENTS
<br />
<br />DECEMBER 31, 2016 AND 2015
<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, 2016 and 2015 are as follows:
<br />
<br />2016 2015
<br />Deferred tax assets:
<br />Net operating loss and other tax carryforwards -
<br />state and federal 606$ 606$
<br />Temporary differences for reimbursed expenses 274,206 262,425
<br />Post-retirement health benefits 155,721 204,843
<br />State research and development tax credit 4,067 27,171
<br />Accrual to cash adjustment 50,834 -
<br /> Total deferred tax assets 485,434 495,045
<br />Deferred tax liabilities:
<br />Accrual to cash adjustment - (11,965,024)
<br />Depreciation (3,787,921) (3,288,464)
<br /> Total deferred tax liabilities (3,787,921) (15,253,488)
<br /> Net deferred tax liabilities (3,302,487)$ (14,758,443)$
<br />
<br />No valuation allowance for deferred tax assets was required as of December 31, 2016 and 2015. 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 35% and
<br />income tax expense (benefit) for the years ended December 31, 2016 and 2015 is as follows:
<br />
<br />2016 2015
<br />Expected income tax expense at statutory rate 5,912,861$ 5,208,222$
<br />State income taxes, net of federal benefit 541,276 177,874
<br />Research and development tax credit (1,537,976) 835
<br />Permanent differences (775,805) 62,543
<br />Change in uncertain tax positions (229,132) -
<br />Other 42,646 4,894
<br />3,953,870$ 5,454,368$
<br />
<br />As of December 31, 2016, the Company has net operating loss carryforwards for federal and state income tax
<br />purposes of $0 and $15,547, respectively, which are available to offset future federal and state taxable income,
<br />if any, for the next 15 years.
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