AMCON DISTRIBUTING CO Income Taxes Disclosure
8. INCOME TAXES:
The components of income tax expense from operations for fiscal 2025 and fiscal 2024 consisted of the following:
| 2025 |
| 2024 | |||
Current: Federal | $ | 882,596 | $ | 2,998,194 | ||
Current: State |
| 438,650 |
| 671,450 | ||
| 1,321,246 |
| 3,669,644 | |||
Deferred: Federal |
| (277,146) |
| (461,826) | ||
Deferred: State |
| (49,100) |
| (81,818) | ||
| (326,246) |
| (543,644) | |||
Income tax expense | $ | 995,000 | $ | 3,126,000 | ||
The difference between the Company’s income tax expense in the accompanying consolidated financial statements and the amount that would be calculated using the statutory income tax rate of 21% for both fiscal 2025 and fiscal 2024 on income from operations before income taxes is as follows:
| 2025 |
| 2024 | |||
Tax at statutory rate | $ | 328,385 | $ | 1,567,122 | ||
Nondeductible business expenses |
| 517,964 |
| 1,162,221 | ||
State income taxes, net of federal tax benefit |
| 244,827 |
| 472,853 | ||
Tax attributable to non-controlling interest | (103,536) | (203,757) | ||||
Other |
| 7,360 |
| 127,561 | ||
$ | 995,000 | $ | 3,126,000 | |||
Temporary differences between the financial statement carrying balances and tax basis of assets and liabilities giving rise to net deferred tax assets (liabilities) at September 2025 and September 2024 relates to the following:
| 2025 |
| 2024 | |||
Deferred tax assets: | ||||||
Allowance for expected credit losses | $ | 280,444 | $ | 252,263 | ||
Accrued expenses |
| 119,210 |
| — | ||
Inventory |
| 545,404 |
| 559,277 | ||
Other |
| 573,704 |
| 838,158 | ||
Interest expense limitation | 3,240,394 | 1,667,806 | ||||
Net operating loss carry forwards - state |
| 697,013 |
| 697,013 | ||
Total gross deferred tax assets |
| 5,456,169 |
| 4,014,517 | ||
Less: Valuation allowance |
| (697,013) |
| (697,013) | ||
Total net deferred tax assets | 4,759,156 | 3,317,504 | ||||
Deferred tax liabilities: | ||||||
Trade discounts | 553,894 | 554,066 | ||||
Operating lease, right-of-use assets | 99,457 | 99,488 | ||||
Property and equipment |
| 7,068,176 |
| 5,834,321 | ||
Goodwill |
| 921,799 |
| 921,799 | ||
Accrued expenses | — | 117,878 | ||||
Intangible assets |
| 163,900 |
| 164,268 | ||
Total deferred tax liabilities | 8,807,226 | 7,691,820 | ||||
Total net deferred income tax liability | $ | 4,048,070 | $ | 4,374,316 | ||
The Company had a valuation allowance of approximately $0.7 million at both September 2025 and September 2024, against certain state net operating losses, which more likely than not will not be utilized. The Company had no material unrecognized tax benefits, interest, or penalties during fiscal 2025 or fiscal 2024, and the Company does not anticipate any such items during the next twelve months. The Company’s policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Operations. The Company files income tax returns in the U.S. and various states and the tax years 2022 and forward remain open under U.S. and state statutes. During the fourth quarter of fiscal 2025, the One Big Beautiful Bill Act was signed into law. The Company is evaluating any impacts the legislation may have on its consolidated financial statements.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.