Income Taxes |
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| Income Taxes | Note 8. Income Taxes The components of income before provision of income taxes are as follows:
The provision for income taxes consists of the following for the years ended June 30, 2026 and 2025:
The reconciliation from the federal statutory income tax rate to our effective income tax rate for the fiscal year ended June 30, 2026, applying ASU 2023-09 prospectively, is as follows:
The reconciliation from the federal statutory income tax rate to the effective income tax rate for the fiscal year ended June 30, 2025, applying ASC 740 prior to the adoption of AUS 2023-09, is as follows:
For the year ended June 30, 2025, the majority of the adjustment to the prior year, primarily offset by the change in valuation allowance, was due to recording additional federal and state net operating losses (“NOL”) from stock acquisitions in prior years. This was precipitated by the finalization of a study to determine the amount of NOLs available after the change in ownership under Internal Revenue Code Section 382. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2026 and 2025 are as follows:
The Company has provided a valuation allowance on the deferred tax assets at June 30, 2026 and 2025 to reduce such assets to zero, since it is not deemed more likely than not that the Company will generate future taxable income to utilize such assets. Management will review this valuation allowance requirement periodically and adjust as warranted. The net change in the valuation allowance for the years ended June 30, 2026 and 2025 was a decrease of $970,652 and an increase of $1,858,749, respectively. At June 30, 2026 and 2025, the Company had federal NOL carryforwards of approximately $14,716,000 and $16,552,000, respectively, and state NOL carryforwards of approximately $7,410,000 and $7,502,000, respectively. Federal NOLs generated after 2018 can be carried forward indefinitely with some limitations. Federal NOLs generated prior to that have a 20-year carryforward period. At June 30, 2026, all remaining federal NOLs can be carried forward indefinitely; however, of these NOLs, approximately $11,400,000 relate to companies acquired in prior years and are subject to annual limitations under IRC Section 382. State NOLs will begin to expire in . The Company is subject to taxation in the United States, various states and Mexico. The Company is subject to United States federal or state income tax examinations by certain tax authorities for fiscal year 2015 and forward, in part due to utilization of NOLs in the current fiscal year. The Company is currently not under examination in any jurisdiction. Cash paid for income taxes (net of refunds) in the year ended June 30, 2026 consisted of the following:
The state taxes were made up primarily of FL, GA, IL, MA, and TX. The foreign taxes were solely Mexico. Cash paid for income taxes (net of refunds) in the year ended June 30, 2025 were $82,811. As of June 30, 2026 and 2025, the Company had no uncertain tax positions. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of June 30, 2026 and 2025, the Company has no accrued interest or penalties related to uncertain tax positions. |
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