CKX LANDS, INC. Income Taxes Disclosure

Note 8:

Income Taxes

 

The Company files federal and state income tax returns on a calendar year basis. The net deferred tax asset in the accompanying balance sheets includes the following components at December 31, 2025 and 2024:

 

		2025				2024
Deferred tax assets		$	-			$	231,744
Deferred tax liabilities			109,954				-
		$	109,954			$	231,744

 

Reconciliations between the United States federal statutory income tax provision, using the statutory rate of 24% and 26%, and the Company’s provision for income taxes at December 31, 2025 and 2024 are as follows:

 

		2025								2024
		Amount				Percentage				Amount				Percentage
Income tax on income before extraordinary item:
Tax at statutory rates		$	961,980				24.2	%		$	86,592				25.6	%
Tax effect of the following:
Federal statutory depletion			(9,799	)			(0.3	)%			(10,612	)			(3.1	)%
State statutory depletion			(5,276	)			(0.1	)%			(5,715	)			(1.7	)%
Stock-based compensation			74,635				1.9	%			79,109				23.4	%
Other			(54,744	)			(1.4	)%			(61,874	)			(18.3	)%
Income tax on income		$	966,796				24.3	%		$	87,500				25.9	%

 

Deferred tax assets and liabilities result from timing differences in the recognition of revenue and expenses for tax and financial statement purposes. The effect of these timing differences at December 31, 2025 and 2024 is as follows:

 

		2025				2024
Net operating loss carryover		$	-			$	59,807
Percentage depletion carryover			-				-
Stock-based compensation			-				359,601
Deferred gain			(36,635	)			(77,714	)
Casualty loss			(73,319	)			(109,950	)
Deferred tax assets (liabilities)		$	(109,954	)		$	231,744

 

The Company files income tax returns for federal and state purposes. Generally, the Company’s tax returns remain open for three years for tax examination purposes. Tax positions are recognized when they are more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon settlement. The Company is subject to periodic audits by the Internal Revenue Service and other state and local taxing authorities. These audits may challenge certain of the Company’s tax positions such as timing and amount of income and deductions and the allocation of taxable income to various tax jurisdictions. The Company evaluates its tax positions and establishes liabilities if significant in accordance with the applicable accounting guidance on uncertainty in income taxes. With few exceptions, the Company is no longer subject to U.S. Federal and state income tax examinations by the tax authorities for calendar years ending before December 31, 2022.