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INCOME TAXES

12 Months Ended

Dec. 31, 2019

INCOME TAXES

INCOME TAXES

NOTE 16 – INCOME TAXES

For the years ended December 31, 2019, 2018 and 2017, components of our provision for income taxes are as follows:

​	​	​	​	​	​	​	​	​	​
Provision for Income Taxes		2019			2018			2017
Deferred taxes	​	$	13,787,654	​	$	3,445,721	​	$	10,416,171
Provision for Income Taxes	​	$	13,787,654	​	$	3,445,721	​	$	10,416,171

​

The following is a reconciliation of income taxes computed using the U.S. federal statutory rate to the provision for income taxes:

​	​	​	​	​	​	​	​	​	​
Rate Reconciliation		2019			2018			2017
Tax at federal statutory rate	​	$	9,089,683	​	$	2,613,551	​	$	4,194,556
Non-deductible expenses	​	​	2,399	​		3,197	​		6,158
Excess tax benefit from stock option exercises and restricted stock vesting	​	​	4,055,418	​		828,973	​		(453,217)
Adjust prior estimates to tax return	​	​	19	​		—	​		(58,766)
States taxes, net of Federal benefit	​	​	160,913	​		—	​		124,200
Effect of departure from State of Kansas	​	​	—	​		—	​		(350,059)
Adjustment for change in future effective tax rate (1) (2)	​	​	479,222	​		—	​		6,953,299
Provision for Income Taxes	​	$	13,787,654	​	$	3,445,721	​	$	10,416,171

​

(1) The enactment of the Tax Cuts and Jobs Act provided for a decrease in the corporate tax rate to 21% from 35%, resulting in a net $6.95 million reduction to our net deferred tax asset as of December 31, 2017. The Wishbone Acquisition referenced in Note 6 added properties in the State of New Mexico and thereby adjusted our effective tax rate for 2019.

(2) The acquisition of the Northwest Shelf assets from Wishbone included properties in the State of New Mexico. The tax rates associated with the State of New Mexico adjusted our overall tax rate from 21% to 21.29%. This resulted in an additional tax expense during the year ended December 31, 2019 of $479,222.

The net deferred taxes consisted of the following at December 31, 2019 and 2018:

​	​	​	​	​	​	​
Deferred Taxes:		2019			2018
Deferred tax liabilities		​	​	​	​
Property and equipment	​	$	56,325,029	​	$	33,888,806
​	​	​	​	​	​	​
Deferred tax assets	​	​	​	​
Stock-based compensation	​	​	269,264	​		3,734,911
Operating loss and IDC carryforwards	​	​	50,054,589	​		37,940,374
Deferred tax assets	​	​	50,323,853	​		41,675,285
Net deferred income tax liability (asset)	​	$	6,001,176	​	$	(7,786,479)

​

As of December 31, 2019, the Company had net operating loss carry forwards for federal income tax reporting purposes of approximately $107.4 million which, if unused, will begin to expire in 2027 and fully expire in 2038 and an additional $129.9 million that will not expire.

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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