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Note 10 - Income Taxes
 12 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 10.

INCOME TAXES

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Due to the tax rates being changed in 2018 we have used a federal and state blended rate of 26%.

 

Net deferred tax liabilities consist of the following components at June 30:

 

  

2024

  

2023

 

Deferred tax assets:

        

NOL carryover

 $1,825,300  $9,539,700 

Capital loss carryover

  38,600   38,600 

Allowance for bad debts

  59,200   44,200 

Accrued expense

  167,300   199,000 

Operating lease ROU

  2,900   1,000 

Depreciation

  (120,000)  (247,500)

Amortization

  (1,075,600)  (932,100)
         

Valuation allowance

  (897,700)  (8,642,900)

Net deferred tax asset

 $-  $- 

 

The income tax provision differs from the amounts of income tax determined by applying the US federal income tax rate to pretax income from continuing operations for the years ended June 30, 2024 and 2023 due to the following:

 

  

2024

  

2023

 
         

Book income

 $1,549,156  $1,453,475 

Stock for services

  71,490   15,824 

Change in accrual

  (31,672)  16,586 

Life insurance

  51,239   14,933 

Meals and entertainment

  1,961   844 

Change in allowance

  14,942   (9,357)

Change in depreciation

  84,332   (181,879)

Unrealized gain

  (17,432)  2,536 

Operating lease ROU

  447   1,002 

Excess

  -   - 

Capital loss carryover

  -   - 

NOL utilization

  (1,724,463)  (1,313,964)

Valuation allowance

  -   - 
  $-  $- 

 

At June 30, 2024, the Company had net operating loss carryforwards of approximately $7,020,239 that may be offset against past and future taxable income from the year 2024 forward. A significant portion of the net operating loss carryforwards began to expire in 2019. No tax benefit has been reported in the June 30, 2024 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. In January of 2009 the Company acquired Prescient Applied Intelligence, Inc. which had significant net operating loss carryforwards. Due to the change in ownership, Prescient’s (subsequently renamed Park City Group then ReposiTrak) net operating loss carryforwards may be limited as to use in future years. The limitation will be determined on a year-to-year basis. In June of 2015 the Company acquired ReposiTrak, which had significant net operating loss carryforwards. Due to the change in ownership, ReposiTrak's net operating loss carryforwards may be limited as to use in future years. In December of 2023 ReposiTrak was merged into the Park City Group subsidiary (subsequently named ReposiTrak) which caused the remaining original ReposiTrak entity net operating loss carryforwards to be lost.

 

The Company determines whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, the Company measures the tax position to determine the amount to recognize in the financial statements. The Company performed a review of its material tax positions in accordance with these recognition and measurement standards.

 

The Company has concluded that there are no significant uncertain tax positions requiring disclosure, and there are not material amounts of unrecognized tax benefits.

 

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of June 30, 2024, the Company had no accrued interest or penalties related to uncertain tax positions.