v3.25.2
Income Taxes
 12 Months Ended
Mar. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

5. Income Taxes

 

In August 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA 2022”). The IRA 2022, among other tax provisions, imposes a 15% corporate alternative minimum tax on adjusted financial statement income of certain large corporations (generally, corporations reporting more than $1 billion of average adjusted pre-tax net income on their consolidated financial statements), effective for tax years beginning after December 31, 2022. The IRA 2022 also establishes a 1% excise tax on stock repurchases made by publicly traded U.S. corporations, effective for stock repurchases after December 31, 2022. The IRA 2022 did not impact the Company’s current year tax provision or the Company’s consolidated financial statements.

 

 

The Company files a consolidated federal income tax return and various state income tax returns. The amount of income taxes the Company records requires the interpretation of complex rules and regulations of federal and state taxing jurisdictions. With few exceptions, the earliest year open to examination by U.S. federal and state income tax jurisdictions is 2020.

 

The income tax provision consists of the following for the years ended March 31, 2025 and 2024:

 

   2025   2024 
   Year Ended 
   March 31 
   2025   2024 
Current income tax expense:          
Federal  $232,035   $189,254 
State   63,352    119,629 
Total current income tax expense  $295,387   $308,883 
Deferred income tax expense (benefit):          
Federal   56,614    311,661 
State   (47,671)   - 
Total deferred income tax expense  $8,943   $311,661 
Total income tax expense:  $304,330   $620,544 

 

Income tax for the year ended March 31, 2025 was $304,330. Income tax for the year ended March 31, 2024 was $620,544.

 

GAAP requires deferred income tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. Significant components of net deferred tax assets (liabilities) at March 31 are as follows:

 

   2025   2024 
Deferred tax assets:          
Percentage depletion carryforwards  $1,283,374   $1,281,990 
Deferred stock-based compensation   15,745    15,745 
Asset retirement obligation   150,957    150,950 
Net operating loss   -    151,193 
Other   82,083    35,345 
Total deferred tax assets  $1,532,159   $1,635,223 
Deferred tax liabilities:          
Excess financial accounting bases over tax bases of property and equipment   (1,852,763)   (1,946,884)
Deferred tax liability, net  $(320,604)  $(311,661)
Valuation allowance   -    - 
Net deferred tax liabilities  $(320,604)  $(311,661)

 

As of March 31, 2025, the Company has a statutory depletion carryforward of approximately $6,100,000, which does not expire.

 

 

A reconciliation of the provision for income taxes to income taxes computed using the federal statutory rate for years ended March 31 follows:

 

   2025   2024 
Tax expense at federal statutory rate (1)  $423,507   $412,754 
Statutory depletion carryforward   (153,438)   152,054 
Change in valuation allowance   -    (3,578)
Permanent differences   22,206    46,819 
State income expense, net of federal benefit   50,048    94,507 
Other   (37,993)   (82,012)
Total income tax  $304,330   $620,544 
Effective income tax rate   15.1%   31.6%

 

  (1) The federal statutory rate was 21% for fiscal years ending March 31, 2025 and 2024.

 

For the years ended March 31, 2025 and 2024, the Company did not have any uncertain tax positions.

 

While the amount of unrecognized tax benefits may change in the next 12 months, the Company does not expect any change to have a significant impact on its results of operations. The recognition of the total amount of the unrecognized tax benefits would have an impact on the effective tax rate. If these unrecognized tax benefits are disallowed, the Company will be required to pay additional taxes.