Marygold Companies, Inc. Income Taxes Disclosure

NOTE 13. INCOME TAXES

 

The following table summarizes loss before income taxes (in thousands):

 SUMMARY OF (LOSS) INCOME BEFORE INCOME TAXES

		Years Ended June 30,
		2025				2024
United States		$	(6,327	)		$	(5,420	)
Foreign			(1,055	)			(28	)
Loss before income taxes		$	(7,382	)		$	(5,448	)

 

Income Tax Provision

 

The composition of the benefit from income taxes consisted of the following (in thousands):

 SCHEDULE OF BENEFIT FROM (PROVISION FOR) INCOME TAXES

		Years Ended June 30,
		2025				2024
United States		$	1,302			$	1,408
Foreign			260				(29	)
Total benefit from income taxes		$	1,562			$	1,379

 

 

		Years Ended June 30,
		2025				2024
Current:
Federal		$	(39	)		$	299
States			(16	)			(43	)
Foreign			7				(74	)
Total current			(48	)			182
Deferred:
Federal			1,356				1,071
States			1				81
Foreign			253				45
Total deferred			1,610				1,197
Total benefit from income taxes		$	1,562			$	1,379

 

Tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets for the years ended June 30, 2025 and 2024 are presented below (in thousands):

 SCHEDULE OF DEFERRED TAX ASSETS

		Years Ended June 30,
		2025				2024
Deferred tax assets:
Intangible assets - U.S.		$	685			$	756
Net operating loss			2,222				801
Capital loss carryover			45				43
Accruals, reserves and other - U.S.			488				369
Total deferred tax assets - U.S.		$	3,440			$	1,969
Deferred tax liabilities:
Intangible assets - foreign		$	(195	)		$	(313	)
Accruals, reserves and other - foreign			(26	)			(47	)
Total deferred tax liabilities - foreign		$	(221	)		$	(360	)
Total net deferred tax assets		$	3,219			$	1,609

 

 

The Company’s accounting for deferred taxes involves the evaluation of several factors concerning the realizability of the Company’s net deferred tax assets. The Company primarily considered such factors as the Company’s history of operating losses, the nature of the Company’s deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. The Company does not have a valuation allowance as of June 30, 2025 and 2024 as the Company believes that it is more likely than not that the net deferred tax assets will be realized.

 

The benefit from income taxes for the years ended June 30, 2025 and 2024 differed from the amounts computed by applying the statutory federal income tax rate of 21.0% to pretax loss as a result of the following (in thousands):

 SCHEDULE OF INCOME TAX BENEFIT EXPENSE

		Years Ended June 30,
		2025				2024
Federal tax benefit at statutory rate		$	1,550			$	1,144
State income taxes			(12	)			47
Permanent differences			(14	)			240
Foreign rate differential			38				(52	)
Total tax benefit		$	1,562			$	1,379

 

		Years Ended June 30,
		2025				2024
Federal tax benefit at statutory rate			21.0	%			21.0	%
State income taxes			(0.2	)%			0.9	%
Permanent differences			(0.1	)%			4.1	%
Foreign rate differential			0.5	%			(0.7	)%
Total tax benefit			21.2	%			25.3	%

 

 

Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. During the year ended June 30, 2024, the Company reduced the balance of gross unrecognized tax benefits, which included interest and penalties, by $0.3 million to zero and the balance remained zero during the year ended June 30, 2025.

 

As of June 30, 2025 and 2024, the Company has federal net operating loss carryforwards of $9.4 million and $3.3 million, respectively, and state net operating loss carryforwards of $6.9 million and $3.4 million, respectively. These state operating loss carryforwards begin to expire in 2045. The federal net operating loss carryforward will carryforward indefinitely, but is subject to the 80% taxable income limitation.

 

The Company files income tax returns in the United States, and various state and foreign jurisdictions. The federal, state and foreign income tax returns are subject to tax examinations for the tax years 2020 through 2024 as of year ended June 30, 2025. To the extent the Company has tax attribute carry forwards, the tax years in which the attribute was generated may still be adjusted upon examination by the U.S. Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period. There were no ongoing examinations by taxing authorities as of June 30, 2025.

 

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2025 and 2024, the Company accrued and recognized as a liability zero and $0.1 million, respectively, of interest and related penalties to uncertain tax positions.

 

Congress enacted the One Big Beautiful Bill Act (“OBBBA”), which was signed into law on July 4, 2025. This law changes or makes permanent certain tax laws for corporations, including provisions relating to domestic research and development costs, bonus depreciation and foreign derived intangible income. Management is currently evaluating the potential impact of these provisions on deferred taxes and future tax obligations.