INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 11. INCOME TAXES

 For 2015 ARL, TCI and IOT had a combined net taxable income. For 2014  ARL, TCI and IOT had a combined net taxable loss and TCI recorded no current tax (benefit) or expense. For 2013 TCI consolidated with IOT had a net taxable loss and the remainder of the group had net taxable income resulting in a tax (benefit) to TCI. The expense (benefit) in each year was calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory rate of 35%.

 Current expense (benefit) is attributable to (dollars in thousands): 

	2015		2014			2013
Income (loss) from continuing operations	$	517	$	(22,902	)	$	(24,598	)
Income (loss) from discontinued operations		483		22,902			16,835
Tax expense (benefit)	$	1,000	$	—		$	(7,763	)

The Federal income tax expense differs from the amount computed by applying the corporate tax rate of 35% to the income before income taxes as follows (dollars in thousands):

	2015			2014			2013
Computed “expected” income tax (benefit) expense	$	4,648		$	14,762		$	26,998
Book to tax differences for partnerships not consolidated for tax purposes		5,152			(23,900	)		(33,565	)
Book to tax differences of depreciation and amortization		(160	)		1,461			1,222
Book to tax differences in gains on sale of property		(4,073	)		(2,350	)		(20,308	)
Book provision for loss		1,855			—			3,962
Partial valuation allowance against current net operating loss benefit		(9,596	)		7,069			16,835
Other		2,524			2,958			2,139
Total	$	350		$	—		$	(2,717	)
Alternative minimum tax	$	—		$	—		$	—

Deferred income taxes reflect the tax effects of temporary timing differences between carrying amounts of assets and liabilities reflected on the financial statements and the amounts used for income tax purposes. TCI’s tax basis in its net assets differs from the amount at which its net assets are reported for financial statement purposes, principally due to the accounting for gains and losses on property sales, and depreciation on owned properties. The tax effects of temporary differences and net operating loss carry forwards that give rise to the deferred tax assets are presented below (amounts in thousands): 

	2015			2014			2013
Net operating losses	$	46,497		$	56,897		$	71,071
AMT credits		1,900			1,374			1,374
Basis difference of:
Real estate holdings		(17,912	)		876			(3,045	)
Notes receivable		694			757			860
Investments		(4,709	)		(4,693	)		(4,703	)
Notes payable		2,792			6,932			12,496
Deferred gains		11,984			10,146			10,806
Total	$	41,246		$	72,289		$	88,859
Deferred tax valuation allowance		(41,246	)		(72,289	)		(88,859	)
Net deferred tax asset	$	—		$	—		$	—

In November 2015, IOT, ARL, and TCI sold various tracts of land to a third party in exchange for cash and a promissory note. The purchaser's initial and continuing investment was inadequate, and as a result, the transaction is recorded using the deposit method for GAAP purposes.  Due to concerns regarding the collectability of the note, no sale was recognized for GAAP purposes as the transaction is recorded using the deposit method. For tax purposes, the sale is recognized under the installment method. Recognition of the benefits of deferred tax assets will require TCI to generate future taxable income. There is no assurance that TCI will generate earnings in future years. Therefore, TCI has established a valuation allowance for deferred tax assets of approximately $41.2 million, $72.3 million and $88.9 million as of December 31, 2015, 2014 and 2013, respectively.

TCI has tax net operating loss carryforwards of approximately $119 million expiring through the year 2033. The alternative minimum tax credit balance increased in 2015 to approximately $1.57 million. The credit has no expiration date.