Massimo Group Income Taxes Disclosure

NOTE 14 — TAXES

 

Corporate Income Taxes

 

Massimo Motor and Massimo Marine both terminated their status as a Subchapter S Corporation as of June 1, 2023, in connection with the Reorganization and became a taxable C Corporation. Prior to that date, as an S Corporation, the Company had no U.S. federal income tax expense. As such, any periods prior to June 1, 2023 will only reflect a margin tax for the state of Texas and corresponding tax expense. As a C Corporation, the Company combined effective tax rate for federal income taxes of 21% and state margin tax.

 

As of December 31, 2024 and 2023, the Company did not have an accrued liability for uncertain tax positions and does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months. For the years ended December 31, 2024 and 2023, no amounts were incurred for income tax uncertainties or interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company’s tax years since its formation remain subject to possible income tax examination by its major taxing authorities for all periods. The Company’s effective tax rate for the years ended December 31, 2024 and 2023 are 24.5% and 17.0% respectively.

 

The provision for income tax consists of the following:

 

SCHEDULE OF INCOME TAX PROVISION

		2024				2023
		Years Ended
		December 31,
		2024				2023
Income tax provision – current		$	2,056,712			$	2,264,405
Income tax (recovery) provision - deferred			(1,031,850	)			(43,137	)
Deferred tax adjustment – change of tax rates			-				(91,464	)
Income tax (recovery) provision		$	1,024,862			$	2,129,804

 

The following table reconciles the statutory tax rate to the Company’s effective tax:

 

SCHEDULE OF RECONCILIATION OF INCOME TAXES

		2024				2023
		Years Ended
		December 31,
		2024				2023
Net income before income taxes		$	4,179,069			$	12,545,029
Income tax at the federal statutory rate			21	%			21	%
Statutory U.S. federal income tax (recovery) provision			877,604				2,634,456
S Corporation benefits			-				(553,133	)
State margin tax			32,561				139,945
Non-deductible expense			40,048				-
Prior year true-up			74,649				-
Deferred tax adjustment – change of tax rates			-				(91,464	)
Total		$	1,024,862			$	2,129,804

 

 

MASSIMO GROUP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 14 — TAXES (continued)

 

Corporate Income Taxes (continued)

 

The Company’s deferred tax assets and liabilities consist of the following:

 

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

		December 31, 2024				December 31, 2023
Deferred tax assets:
Allowance for credit loss		$	106,090			$	117,046
Property and equipment			16,480				16,480
Lease liability – operating			2,001,843				310,426
Lease liability – financing			16,175				24,920
Other temporary difference			1,032,980				-
Total deferred tax assets			3,173,568				468,872
Deferred tax liabilities:
Right of use assets – operating			(1,992,039	)			(310,426	)
Right of use assets – financing			(15,078	)			(23,845	)
Total deferred tax liabilities			(2,007,117	)			(334,271	)
Deferred tax assets, net		$	1,166,451			$	134,601