Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 442

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 1C
Chunk 442
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    Investment Tax Credits 
     181  
     240 
  
    Other 
     814  
     612 
  
    Total Accumulated Deferred Income Taxes 
    $101,235  
    $88,736 

52 

The determination of our provision for income
taxes requires the use of estimates and the interpretation and application of tax laws. Judgment is required in assessing the deductibility
and recoverability of certain tax benefits. We use the asset and liability method to determine and record deferred tax assets and liabilities,
representing future tax benefits and taxes payable, which result from the differences in basis recorded in GAAP financial statements and
amounts recorded in the income tax returns. The deferred tax assets and liabilities are recorded utilizing the statutorily enacted tax
rates expected to be in effect at the time the assets are realized and/or the liabilities settled. An offsetting valuation allowance is
recorded when it is more likely than not that some or all of the deferred income tax assets won’t be realized. Any significant changes
to the estimates and judgments with respect to the interpretations, timing or deductibility could result in a material change to earnings
and cash flows.

Occasionally, federal and state taxing authorities
determine that it is necessary to make certain changes to the income tax laws. These changes may include but are not limited to changes
in the tax rates and/or the treatment of certain items of income or expense. Accounting guidance requires that the Company reflect the
effect of changes in tax laws or tax rates at the date of enactment. Additionally, the Company is required to re-measure its deferred
tax assets and liabilities as of the date of enactment. For non-regulated entities, the effects of changes in tax laws or tax rates are
required to be included in income from continuing operations for the period that includes the enactment date. For regulated entities,
if as the result of an action by a regulator it is probable that the future increase or decrease in taxes payable for items such as changes
in tax laws or rates will be recovered from or returned to customers through future rates, an asset or liability shall be recognized for
that probable increase or decrease in future revenue. Accounting guidance also requires that regulatory liabilities and/or assets be considered
a temporary difference for which a related deferred tax asset and/or liability shall be recognized.

Accounting guidance requires that we establish
reserves for uncertain tax positions, if any, when it is more likely than not that the positions will not be sustained when challenged