ALICO, INC.ALCO
ALICO, INC. Income Taxes Disclosure
Note 9. Income Taxes
The Federal and State filings remain subject to examination by tax authorities for tax periods ending after September 30, 2022 and 2021, respectively.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law, which includes a broad range of tax reform provisions that may affect the Company's financial results. The OBBBA allows for the addback of tax depreciation and amortization when computing interest limitations under Section 163(j) of the U.S. Internal Revenue Code of 1986, as amended, a reinstatement of elective 100% first-year bonus depreciation for qualified property acquired after January 19, 2025, and a more favorable tax rate on Foreign-derived Deduction Eligible Income and income from non-U.S. subsidiaries (Net CFC Tested Income), among other provisions. The Company has evaluated the impact of these provisions and noted an immaterial impact to fiscal year 2025. However, the Company is still currently evaluating the impact of these provisions which could affect the Company’s effective tax rate and deferred tax assets in future periods. A quantitative estimate of the specific financial effects cannot be reasonably determined at this time due to the complexity of the changes in the tax reform. The impact of those tax provisions in the OBBBA will depend on our facts in each year and anticipated guidance from the U.S. Department of the Treasury.
The income tax (benefit) provision for the years ended September 30, 2025 and 2024 consists of the following:
| (in thousands) | Years Ended September 30, | ||||||||||
| 2025 | 2024 | ||||||||||
| Current: | |||||||||||
| Federal | $ | (1) | $ | 99 | |||||||
| State | (3) | 34 | |||||||||
| Total current | (4) | 133 | |||||||||
| Deferred: | |||||||||||
| Federal | (37,327) | 2,260 | |||||||||
| State | (9,428) | 616 | |||||||||
| Valuation allowance | 8,336 | 1,588 | |||||||||
| Total deferred | (38,419) | 4,464 | |||||||||
| Income tax (benefit) provision | $ | (38,423) | $ | 4,597 | |||||||
Income tax (benefit) provision attributable to income before income taxes differed from the amount computed by applying the statutory federal income tax rate of 21% to (loss) income before income taxes for each of the years ended September 30, 2025 and September 30, 2024, respectively, as a result of the following:
| (in thousands) | Years Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Amount | Tax Rate | Amount | Tax Rate | ||||||||||||||||||||
| Income tax (benefit) provision at the statutory federal rate | $ | (39,018) | 21.0 | % | $ | 2,300 | 21.0 | % | |||||||||||||||
| Increase (decrease) resulting from: | |||||||||||||||||||||||
| State income taxes, net of federal benefit | (8,010) | 4.3 | % | 514 | 4.7 | % | |||||||||||||||||
| Permanent reconciling items, net | 196 | (0.1 | %) | 13 | 0.1 | % | |||||||||||||||||
| Officer life insurance | 11 | — | % | (16) | (0.1 | %) | |||||||||||||||||
| Non-Controlling Interest - Citree | 37 | — | % | 130 | 1.2 | % | |||||||||||||||||
| Valuation allowance | 8,336 | (4.6 | %) | 1,588 | 14.5 | % | |||||||||||||||||
| Other | 25 | — | % | 68 | 0.6 | % | |||||||||||||||||
| Income tax (benefit) provision | $ | (38,423) | 20.6 | % | $ | 4,597 | 42.0 | % | |||||||||||||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of September 30, 2025, and 2024 are presented below:
| (in thousands) | September 30, | ||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Goodwill | $ | 7,141 | $ | 8,986 | |||||||
| Inventories | 235 | 194 | |||||||||
| Stock compensation | 161 | 190 | |||||||||
| Accrued bonus | 195 | 145 | |||||||||
| Intangibles | 232 | 288 | |||||||||
| Charitable contribution carryforward | 5,804 | 5,800 | |||||||||
| Net operating loss | 11,377 | 4,576 | |||||||||
| Interest expense limitation | 2,681 | 1,605 | |||||||||
| Other | 34 | 115 | |||||||||
| Total deferred tax assets | 27,860 | 21,899 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | 15,117 | 55,954 | |||||||||
| Investment in Citree | 907 | 846 | |||||||||
| Prepaid insurance | 197 | 215 | |||||||||
| Total deferred tax liabilities | 16,221 | 57,015 | |||||||||
| Valuation allowance | 14,094 | 5,757 | |||||||||
| Net deferred income tax liabilities | $ | (2,455) | $ | (40,873) | |||||||
The Company has a federal net operating loss carryforward of $45,362 and state net operating loss carryforward of $42,631 at September 30, 2025, which resulted in deferred tax assets of $9,526 and $1,852, respectively. Both the federal and state net operating losses have an indefinite life.
The Company has a partial valuation allowance on both our charitable contribution carryforward balance and federal and state tax loss carryforward balances as of September 30, 2025 and a partial valuation allowance on our charitable contribution carryforward balance at September 30, 2024. The valuation allowance at September 30, 2025 and 2024 was $14,094 and $5,757, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 24, 2025 | Showing above |
| 2024 | Dec 2, 2024 | |
| 2023 | Dec 6, 2023 | |
| 2022 | Dec 13, 2022 | |
| 2021 | Dec 7, 2021 | |
| 2020 | Dec 8, 2020 | |
| 2019 | Dec 5, 2019 | |
| 2018 | Dec 6, 2018 | |
| 2017 | Dec 11, 2017 | |
| 2016 | Dec 6, 2016 | |
| 2015 | Dec 10, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.