PURE CYCLE CORP Income Taxes Disclosure
NOTE 10 – INCOME TAXES
For the year ended August 31, 2025, Pure Cycle recorded income tax expense of $4.4 million, which consisted of current income tax expense of $4.2 million and deferred income tax expense of $0.1 million. The deferred tax expense consists mainly of the timing difference between book and tax depreciation of fixed assets.
For the year ended August 31, 2024, Pure Cycle recorded income tax expense of $4.0 million, which consisted of current income tax expense of almost $4.0 million and deferred income tax expense of less than $0.1 million. The deferred tax expense consists mainly of the timing difference between book and tax depreciation of fixed assets.
During the year ended August 31, 2025, Pure Cycle paid Federal and State income tax installments of $3.6 million and $0.8 million, respectively. During the year ended August 31, 2024, Pure Cycle paid Federal and State income tax installments of $1.6 million and $0.5 million, respectively.
Deferred income taxes reflect the tax effects of net operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of August 31 are as follows:
(In thousands) |
| August 31, 2025 |
| August 31, 2024 | ||
Deferred tax assets (liabilities): |
|
|
|
| ||
Depreciation and depletion | $ | (2,361) | $ | (2,237) | ||
Non-qualified stock options |
| 522 |
| 527 | ||
Accrued compensation | 127 | 230 | ||||
Deferred revenue | 113 | 31 | ||||
Other |
| 58 |
| 54 | ||
Net deferred tax liability | $ | (1,541) | $ | (1,395) | ||
As of August 31, 2025 and 2024, the Company had no liability for unrecognized tax benefits.
Income taxes computed using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to the following for the fiscal years ended August 31:
Year Ended | ||||||
(In thousands) |
| August 31, 2025 |
| August 31, 2024 | ||
Expected expense (benefit) from federal taxes at statutory rate of 21% | $ | 3,669 | $ | 3,283 | ||
State taxes, net of federal benefit | 600 | 559 | ||||
Permanent and other differences | 45 | 148 | ||||
Stock Compensation | (12) | (14) | ||||
Other | 58 | 43 | ||||
Total income tax expense | $ | 4,360 | $ | 4,019 | ||
As of August 31, 2025 and 2024, the Company had no net operating loss carryforwards available for income tax purposes.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 12, 2025 | Showing above |
| 2024 | Nov 13, 2024 | |
| 2023 | Nov 15, 2023 | |
| 2022 | Nov 14, 2022 | |
| 2021 | Nov 10, 2021 | |
| 2020 | Nov 10, 2020 | |
| 2019 | Nov 12, 2019 | |
| 2018 | Nov 13, 2018 | |
| 2017 | Nov 15, 2017 | |
| 2016 | Oct 28, 2016 | |
| 2015 | Nov 9, 2015 | |
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.