Marwynn Holdings, Inc. Income Taxes Disclosure

NOTE 12 — INCOME TAXES

 

Marwynn is a Nevada holding company subject to 21% corporate federal income tax rate. There is no state income tax rate because no state income tax is levied in Nevada. Marwynn is a holding company and does not have active operations as of April 30, 2025.

 

FuAn, Grand Forest and KZS were incorporated in the State of California, and are subject to 21% corporate federal income tax rate and 8.84% California state income tax rate. Marwynn, FuAn, Grand Forest and KZS file separate corporate income tax returns instead of a consolidated income tax return.

 

For the years ended April 30, 2025, and 2024, the provision for income taxes consisted of the following:

 

		April 30, 2025				April 30, 2024
Current:
Federal income tax expense		$	103,885			$	265,115
State income tax expense			49,452				127,111
Deferred:
Federal income tax benefit			(117,269	)			(21,381	)
State income tax benefit			(38,998	)			(7,110	)
Total income tax expense (benefit)		$	(2,930	)		$	363,735

  

The following table reconciles the Company’s effective income tax rate for the years ended April 30, 2025 and 2024:

 

		Year ended April 30, 2025				Year ended April 30, 2024
Federal statutory rate			(21.0	)%			21.0	%
State statutory rate, net of effect of state income tax deductible to federal income tax			(6.98	)%			6.98	%
Permanent difference – penalties, interest, and others			0.34	%			1.55	%
Valuation allowance			27.57	%			(1.64	)%
Effective tax rate			(0.07	)%			27.89	%

Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes are comprised of the following:

 

		April 30, 2025				April 30, 2024
Deferred tax assets:
Sales allowance		$	57,643			$	57,643
Bad debt expense			155,925				6,911
Operating lease liabilities, net of ROU			77,602				72,705
Finance lease liabilities, net of ROU			432				—
NOL			122,023				—
Valuation allowance			(120,098	)			—
Deferred tax assets, net		$	293,527			$	137,259
Deferred tax liability:
Depreciation expense			41,531				42,211
Deferred tax assets, net of deferred tax liability		$	251,996			$	95,048

 

Uncertain tax positions

 

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As April 30, 2025 and 2024, the Company had $12,131 and $13,091 accrued interest and penalties related to understated income tax payments, respectively. For the years ended April 30, 2025 and 2024, the Company recorded $6,173 and $13,091 of interest and penalties related to understated income tax payments, respectively. The Company intends to file amended income tax returns for these two fiscal years with respect to these positions within the next few months.