Income Taxes

3 Months Ended

Apr. 30, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 13. Income Taxes

Historically, the Company recorded its interim tax provision or benefit for income taxes including the three months ended April 30, 2018, by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Company determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the three months ended April 30, 2019. Thus, the Company used a discrete effective tax rate method to calculate the provision or benefit for income taxes for the three months ended April 30, 2019.

The effective tax rate on consolidated pre-tax income was approximately (2,124.6)% and approximately (35.3)% for the three months ended April 30, 2019 and 2018, respectively. The fluctuation in the rate results primarily from the production tax credits the Company expects to receive associated with its refined coal segment relative to lower pre-tax income in fiscal year 2019.

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, 2014 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,
	2019		2018
Unrecognized tax benefits, beginning of period	$	9,232	$	2,325
Changes for prior years’ tax positions		66		809
Changes for current year tax positions		138		-
Unrecognized tax benefits, end of period	$	9,436	$	3,134

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.