v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

NOTE 4 – INCOME TAXES

 

The components of income (loss) before income taxes were as follows:

 

   2025   2024 
         
U.S.  $(1,251,680)  $92,159,014)
Non-U.S.  $-   $- 

  

The reconciliation between the actual provision for income taxes and that computed by applying the U.S. statutory rate to income (loss) before income taxes are outlined below based on the updated requirements of ASU 2023-09 for 2025.

 

   2025     
         
Current tax at U.S. statutory rate  $(222,999)   21.00%
State and local income taxes, net of federal taxes   (37,891)   3.57%
Foreign Tax Effects   -    -%
Effects of Changes in Tax Law or Rates Enacted in the Current Period   -    -%
Effect of cross-border tax law   -    -%
Tax Credits   -    -%
Changes in Valuation Allowance   176,562    16.63%
Nondeductible/nontaxable items          
Nondeductible/nontaxable items   1,642    (0.15%)
Changes in Unrecognized Tax Benefit   -    -%
Other Adjustments          
Deferred Adjustment   82,686    79%
Income tax expense  $-    -%

 

As previously disclosed prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows

 

   2024 
Tax (benefit) computed at statutory rate of 21% at December 31, 2024, respectively  $(518,740)
      
Increase (decrease) in taxes resulting from:     
Meals & Entertainment   915 
Prior-year true-up for Books   2,380,175 
Deferred State Taxes, net of federal benefit   (102,681)
Other non-deductible expenses   - 
Change in valuation allowance   (1,759,669)
Provision (benefit)  $- 

 

Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Significant components of our deferred assets and liabilities at December 31, 2025 and 2024, respectively, are as follows:

 

   2025   2024 
Deferred Tax Assets (Liabilities):        
Accrued Expenses  $98,999   $22,249 
Net Operating Loss   9,450,310    9,288,524 
Accretion   615,894    613,254 
Share-Based Compensation   86,510    86,510 
Charitable Contributions Carry Forward   2,796    2,743 
Other        14,266 
Allowance for Doubtful Accounts   599,207    571,022 
Interest Expense Limitations        67,221 
Oil and Gas Properties and Fixed Assets   3,292,967    3,320,659 
Investment in RMX Joint Venture   139,969    123,640 
Total deferred tax assets   14,286,652   $14,110,089 
Valuation Allowance   (14,286,652)   (14,110,089)
Net Deferred Tax Asset  $-   $- 

 

During the current year audit, it was determined that there were two immaterial errors in the 2024 income tax disclosures. The deferred tax asset for Oil and Gas Properties and Fixed Assets was overstated by $2.4 million. The error was caused by two different items. The first error was to record a deferred tax liability in work in process where none should have been recorded. The second error was to have recorded a deferred tax liability twice related to the book impairment on oil and gas properties. Both of these changes are completely offset by an equal offsetting change to the valuation allowance resulting in a net impact of $0 on the face of the financials. Only the income tax footnote disclosures were impacted by these errors.

 

As of December 31, 2025, management reviewed the reliability of our net deferred tax assets, and due to our continued cumulative losses, we concluded it is not “more-likely-than-not” our deferred tax assets will be realized. As a result, we have continued to record a full valuation allowance against the deferred tax assets. We will assess the realizability of the deferred tax assets at least yearly and make appropriate updates as needed. We and our subsidiaries have available net operating loss carryforwards of $20.5 million generated in tax years ended before January 1, 2018, which if not utilized, expire in varying amounts between 2026 and 2037. We have $13.7 million net operating loss carryforwards generated after December 31, 2017, which can be carried forward indefinitely.

 

As of December 31, 2025, we did not recognize a liability for uncertain tax positions. Currently, the only differences between our financial statements and our income tax returns relate to normal timing differences such as depreciation, depletion and amortization, which are recorded as deferred taxes on our balance sheets. We do not expect our unrecognized tax benefits to change significantly over the next 12 months. The tax years of 2020 through 2024 remain open to examination by the tax jurisdictions in which we file income tax returns.

 

Net income taxes paid (received) during the years ended December 31, 2025 and 2024, by federal and state jurisdiction (all states combined), were as follows:

 

   2025   2024 
Federal  $-   $- 
State   9,218    8,150 
Total income taxes paid, net  $11,243   $10,174