Income Taxes

3 Months Ended

Apr. 30, 2018

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 14. Income Taxes

The effective tax rate on consolidated pre-tax income was (35.3) % for the three months ended April 30, 2018 and 29.9% for the three months ended April 30, 2017. The fluctuation in the rate results primarily from the production tax credits the Company expects to receive associated with its refined coal segment, lower tax rates as a result of the Tax Cuts and Jobs Act of 2017 (“the Tax Act”) and expected research and experimentation federal tax credits to be claimed and earned in fiscal year 2018. The Company records its tax provision/benefit based on an estimated annual effective rate adjusted for items recorded discretely. The estimated annual effective tax rate includes the impact of the refined coal operation and the expected federal income tax credits to be earned in fiscal year 2018. Based on current projections the Company estimates that its annual effective tax rate will result in a tax benefit of approximately 25-30%.

The Tax Act signed into law on December 22, 2017, reduced the federal corporate income tax rate to 21% effective January 1, 2018. The Tax Act also made numerous other changes to the U.S. tax code, including, but not limited to, permitting full expensing of qualified property acquired after September 27, 2017, expanding prior limitations of the deductibility of certain executive compensation and eliminating the corporate alternative minimum tax.

The SEC issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. In recognition of the inherent complexities associated with accounting for the effects of the Tax Act, SAB 118 provides a measurement period of up to one year from enactment of the Tax Act for companies to complete the accounting for the tax effects of the Tax Act. Although the Company’s accounting for the tax effects of the Tax Act are not yet complete, at January 31, 2018, the Company made a preliminary estimate of the effect of the tax rate reduction on the existing deferred tax balances and recorded a tax benefit of approximately $14,362,000 to remeasure the deferred tax liability at the new 21% rate. The Company will continue to refine the calculation as additional analysis is completed, which will include a final determination of the deferred tax balances at January 31, 2018 after the Company’s federal income tax return is filed, and as further guidance is provided by the Internal Revenue Service.

Through its refined coal operation, the Company earns production tax credits pursuant to IRC Section 45. The credits can be used to reduce future income tax liabilities for up to 20 years.

The Company files a U.S. federal income tax return and various state income tax returns. In general, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years ended January 31, 2013 and prior. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties, is as follows (amounts in thousands):

	Three Months Ended April 30,
	2018		2017
Unrecognized tax benefits, beginning of period	$	2,325	$	2,096
Changes for prior years’ tax positions		809		147
Changes for current year tax positions		—		—
Unrecognized tax benefits, end of period	$	3,134	$	2,243

The Company expects to claim research and experimentation credits in the current year and certain prior years. In connection with this, the Company has increased the amount of unrecognized tax benefits.