FutureFuel Corp. Income Taxes Disclosure

15.	Income taxES

 

The Company prospectively adopted ASU No. 2023-09 (see Note 2 for further details) which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional disclosure on income taxes paid.

 

The following table summarizes the income (or loss) before income tax (or benefit) and the income tax (or benefit) from continuing operations for the years ended:

 

		2025				2024				2023
Income before taxes - U.S.		$	(49,232	)		$	16,295			$	37,383
Income tax provision:
Federal
Current			-				-				-
Deferred			(68	)			477				-
State and other
Current			29				19				1
Deferred			204				296				-
Total		$	165			$	792			$	1

 

 

 

The following table reconciles the income tax provision (benefit) to the U.S. federal statutory rate for the year ended December 31, 2025.

 

		2025
		Amount						%
U.S. federal income tax at the statutory tax rate		$	(10,339	)			21.0	%
State and local income taxes, net of U.S. federal effect (a)			(1,430	)			2.9
Tax credits:
Research credit			(191	)			0.4
Change in valuation allowance			11,610				(23.6	)
Nontaxable or nondeductible items:
CFPC			(517	)			1.1
Other			60				(0.1	)
Other Adjustments:
Expiration of federal capital loss carryforward			865				(1.8	)
Other			107				(0.2	)
Income tax provision		$	165				(0.3	)%

 

(a) The Company is subject to taxation in the U.S. federal jurisdiction and various state jurisdictions.  The significant driver of the state and local income tax expense, net of federal benefit, is primarily attributable to operations in Arkansas (greater than 50%).

 

 

 

Differences between the income tax provision (benefit) computed using the U.S. federal statutory income tax rate were as follows:

 

		2024				2023
Amount computed using the statutory rate of 21% for 2024, 2023, and 2022			21.0	%			21.0	%
Agri-biodiesel production credit			(7.3	)			(3.2	)
Federal BTC benefit			(58.2	)			(32.3	)
State BTC benefit			(8.2	)			(4.4	)
Credit for increasing research activities			(1.3	)			(0.5	)
Dividends received deduction			-				(0.1	)
Capital loss carryforward expirations			1.9				-
State income taxes, net			2.4				2.3
State rate change and other deferred adjustments			1.2				(1.0	)
State loss carryforward expirations			2.6				-
Valuation allowance for deferred tax assets			50.1				18.2
Other			0.7				-
Income tax provision (benefit)			4.9	%			0.0	%

 

The income tax provision in 2025 was $165 or an effective tax rate of (0.3%) as compared to an income tax provision of $792 or an effective tax rate of 4.9% in 2024 and an income tax provision of $1 or an effective tax rate of 0.0% in 2023.

 

The Company's effective tax rate for 2025 reflects the positive effect of the CFPC, new in 2025, and the Small Agri-biodiesel Producer Tax Credit that was reinstated with the Budget Reconciliation Act of 2025 and extended through December 31, 2026.

 

The Company’s effective tax rates for the years 2024, and 2023 reflect the positive effect of the BTC and Small Agri-biodiesel Producer Tax Credit. Based on technical guidance from the Internal Revenue Service, the Company excluded the portion of the BTC not used to satisfy excise tax liabilities from income.

 

 

The significant components of deferred tax assets and liabilities were as follows as of December 31:

 

		2025				2024
Deferred tax assets
Compensation		$	55			$	50
Inventory reserves			739				607
Self-insurance			82				78
Asset retirement obligation			342				331
Deferred revenue			3,146				1,631
Federal net operating loss carryforwards			31,540				21,099
State net operating loss carryforwards			4,652				3,359
Accrued expenses			634				767
Stock based compensation			267				129
Federal credit carryforwards			8,772				8,581
State credit carryforwards			867				676
Research & development costs			1,447				2,000
Derivative instruments			3				56
Capital loss and charitable contribution carryforwards			847				1,703
Other			7				9
Subtotal deferred tax assets			53,400				41,076
Valuation Allowance			(33,916	)			(22,385	)
Total deferred tax assets			19,484				18,691
Deferred tax liabilities
LIFO inventory			(3,884	)			(4,185	)
Depreciation			(15,753	)			(14,377	)
Prepaid expenses			(757	)			(902	)
Total deferred tax liabilities			(20,394	)			(19,464	)
Net deferred tax liabilities		$	(910	)		$	(773	)

 

The Company’s federal net operating loss carryforwards at December 31, 2025 do not expire and can be carried forward indefinitely. Utilization of these carryforwards is limited to 80% of taxable income in any given year. State net operating loss carryforwards at December 31, 2025 reflect losses generated in 2020 through 2025 and, if unused, will expire in years 2028 through 2045. 

 

Federal tax credit carryforwards at December 31, 2025 include the Small Agri-biodiesel Producer Credit and Credit for Increasing Research generated in years 2019 through 2025 and expiring in 2039 through 2045. State credit carryforwards comprise Arkansas In-house Research Credits generated in 2019 through 2020 and expiring in 2028 through 2029.

 

Capital loss and charitable contribution carryforwards were generated in 2020 through 2025 and will expire in 2026 through 2030. 

 

A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the recoverability of its deferred tax assets, the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of the existing deferred tax assets in each taxing jurisdiction. In making this determination, the Company considers positive evidence in the form of projections of future taxable income, reversing temporary differences, and tax planning strategies. In years in which the Company has experienced objective negative evidence in the form of three cumulative years of tax losses, the Company no longer uses taxable income projections to overcome the presumption of losses and deferred tax asset valuations are computed taking into account tax planning strategies and the reversing net deferred tax liability from temporary differences as sources of income.

 

As of December 31, 2025, the Company determined that its deferred tax liabilities would not be sufficient to support its deferred tax assets and recorded a valuation allowance of $33,916, resulting in a net deferred tax liability of $910. As of December 31, 2024, the Company similarly recorded a valuation allowance of $22,385, resulting in a net deferred tax liability of $773.

 

There are no unrecognized tax positions as of December 31, 2025, 2024, or 2023.

 

The Company records interest expense (income) and penalties, net, as a component of income tax provision (benefit) and had accrued interest and penalties of $0, $0, and $0 for December 31, 2025, 2024 and 2023, respectively. Liabilities for accrued interest and tax penalties on unrecognized tax benefits were $0 and $0 at  December 31, 2025 and 2024, respectively.

 

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and with various state jurisdictions. In general, the Company is subject to U.S., state, and local examinations by tax authorities from 2022 forward.

 

The following table presents income taxes paid (net of refunds) for the year ending December 31, 2025:

 

Jurisdiction		2025
Federal		$	-
State of Iowa			(15	)
State of New York			2
State of Tennessee			40
Total		$	27