WILLAMETTE VALLEY VINEYARDS INC Income Taxes Disclosure

NOTE 10 – INCOME TAXES

 

The provision for income taxes consists of:

 

Schedule of Income Tax Provision 

		Year Ended December 31,
		2024				2023
Current tax expense:
Federal		$	3,122			$	4,296
State			145,049				36,702
Current tax expense			148,171				40,998
Deferred tax benefit:
Federal			(333,093	)			(425,065	)
State			(41,877	)			(103,794	)
Deferred tax benefit			(374,970	)			(528,859	)
Total		$	(226,799	)		$	(487,861	)

The effective income tax rate differs from the federal statutory rate as follows:

 

		Year Ended December 31,
		2024		2023
Federal statutory rate		21.00%		21.00%
State taxes, net of federal benefit		-21.76%		2.69%
Permanent differences		-5.90%		-3.24%
Prior year adjustments		-6.54%		-3.07%
Changes in State Blended Tax Rate and Other		-6.16%		11.55%
General Business Credit		85.16%		0.00%
Total		65.80%		28.93%

 

Changes in the tax rate are detailed in the table above. Permanent differences for the periods consist primarily of changes in non-deductible gifts, meals and entertainment as well as political contributions. Changes in tax rate are detailed above. The claiming of general business credits related to amended returns to claim the credit for employer social security and medicare taxes paid on certain employee tips which include carryforwards and permanent item addbacks have a disproportional impact on the rate.

 

Net deferred tax assets and (liabilities) at December 31 consist of:

 

Schedule of Net Deferred Tax Assets and Liabilities 

		December 31,
		2024				2023
Net Operating Losses		$	1,042,956			$	1,246,963
Other			425,215				320,451
Prepaid expenses			(134,527	)			(68,926	)
Depreciation			(3,804,348	)			(4,033,750	)
Inventory			(646,710	)			(576,075	)
General Business Credits			303,733				-
Section 163(j) Carryforward			277,033				199,719
Net noncurrent deferred tax liability			(2,536,648	)		$	(2,911,618	)
Valuation allowance			-				-
Total			(2,536,648	)			(2,911,618	)

 

The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax matters are recognized in income tax expense. The Company recognized no uncertain tax positions, or any accrued interest and penalties associated with uncertain tax positions as of December 31, 2024 and 2023.

 

FASB ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Management believes that the Company will generate sufficient taxable income in the timeframe required to utilize existing net operating losses and therefore no valuation allowance has been recognized.

As of December 31, 2024, the Company has federal net operating loss carryforward of $4,094,216 that do not expire, state net operating loss carryforwards of $3,049,143 which will start expiring in 2033.