3. INCOME TAXES
The Company’s provision (benefit) for income taxes is detailed as follows:
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
314,000 |
|
|
$ |
2,166,000 |
|
|
$ |
2,053,000 |
|
|
State |
|
|
- |
|
|
|
83,000 |
|
|
|
111,000 |
|
|
|
|
|
314,000 |
|
|
|
2,249,000 |
|
|
|
2,164,000 |
|
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
390,000 |
|
|
|
(8,597,000 |
) |
|
|
2,033,000 |
|
|
State |
|
|
(15,000 |
) |
|
|
(1,363,000 |
) |
|
|
639,000 |
|
|
|
|
|
375,000 |
|
|
|
(9,960,000 |
) |
|
|
2,672,000 |
|
|
|
|
$ |
689,000 |
|
|
$ |
(7,711,000 |
) |
|
$ |
4,836,000 |
|
The difference between the provision (benefit) for income taxes and the amount which would result from the application of the federal statutory rate to income before provision (benefit) for income taxes is analyzed below for the years ended September 30:
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes at statutory rate |
|
$ |
1,477,327 |
|
|
$ |
(6,299,259 |
) |
|
$ |
4,955,069 |
|
|
Percentage depletion |
|
|
(570,801 |
) |
|
|
(395,649 |
) |
|
|
(530,783 |
) |
|
State income taxes, net of federal provision (benefit) |
|
|
3,900 |
|
|
|
(683,800 |
) |
|
|
487,500 |
|
|
Effect of graduated rates |
|
|
85,644 |
|
|
|
(86,745 |
) |
|
|
(62,922 |
) |
|
Restricted stock tax benefit |
|
|
(238,000 |
) |
|
|
- |
|
|
|
- |
|
|
Deferred directors compensation benefit |
|
|
(79,000 |
) |
|
|
- |
|
|
|
- |
|
|
Other |
|
|
9,930 |
|
|
|
(245,547 |
) |
|
|
(12,864 |
) |
|
|
|
$ |
689,000 |
|
|
$ |
(7,711,000 |
) |
|
$ |
4,836,000 |
|
Deferred tax assets and liabilities, resulting from differences between the financial statement carrying amounts and the tax basis of assets and liabilities, consist of the following at September 30:
|
|
|
2017 |
|
|
2016 |
|
||
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
Financial basis in excess of tax basis, principally intangible drilling costs capitalized for financial purposes and expensed for tax purposes |
|
$ |
38,185,387 |
|
|
$ |
33,656,415 |
|
|
Derivative contracts |
|
|
200,786 |
|
|
|
- |
|
|
|
|
|
38,386,173 |
|
|
|
33,656,415 |
|
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
State net operating loss carry forwards |
|
|
655,741 |
|
|
|
259,981 |
|
|
AMT credit carry forwards |
|
|
3,499,320 |
|
|
|
- |
|
|
Deferred directors' compensation |
|
|
1,295,333 |
|
|
|
1,273,279 |
|
|
Restricted stock expense |
|
|
411,019 |
|
|
|
494,776 |
|
|
Derivative contracts |
|
|
- |
|
|
|
166,597 |
|
|
Statutory depletion carry forwards |
|
|
634,405 |
|
|
|
- |
|
|
Other |
|
|
839,348 |
|
|
|
785,775 |
|
|
|
|
|
7,335,166 |
|
|
|
2,980,408 |
|
|
Net deferred tax liabilities |
|
$ |
31,051,007 |
|
|
$ |
30,676,007 |
|
At September 30, 2017, the Company had a deferred tax asset of $595,526 related to Oklahoma state income tax net operating loss (OK NOL) carry forwards expiring from 2029 to 2037. There is no valuation allowance for the OK NOL’s, as management believes they will be utilized before they expire. The AMT carry forwards do not have an expiration date.