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TAXES | 9 Months Ended
--- | ---
Sep. 30, 2024
Income Tax Disclosure [Abstract] |
TAXES | NOTE 14 — TAXES Corporate Income Taxes Massimo Motor and Massimo Marine both terminated their status as a Subchapter S Corporation as of June 1, 2023, in connection with the Reorganization and became a taxable C Corporation. Prior to that date, as an S Corporation, the Company had no U.S. federal income tax expense. As such, any periods prior to June 1, 2023 will only reflect a margin tax for the state of Texas and corresponding tax expense. As a C Corporation, the Company combined effective tax rate for federal income taxes of 21% and state margin tax. As of September 30, 2024 and December 31, 2023, the Company did not have an accrued liability for uncertain tax positions and does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months. For the three and nine months ended September 30, 2024 and 2023, no amounts were incurred for income tax uncertainties or interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company’s tax years since its formation remain subject to possible income tax examination by its major taxing authorities for all periods. The Company’s effective tax rate for the three months ended September 30, 2024 and 2023 are 19.9% and 22.3% respectively. The Company’s effective tax rate for the nine months ended September 30, 2024 and 2023 are 23.8% and 20.0% respectively. The provision for income tax consists of the following: SCHEDULE OF INCOME TAX PROVISION
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Income tax provision – current |  | $ | 55,782 |  |  | $ | 1,067,639 |  |  | $ | 2,067,219 |  |  | $ | 1,301,709 |
Income tax (recovery) provision - deferred |  |  | (677,447 | ) |  |  | 38,407 |  |  |  | (974,691 | ) |  |  | (65,158 | )
Income tax (recovery) provision |  | $ | (621,665 | ) |  | $ | 1,106,046 |  |  | $ | 1,092,528 |  |  | $ | 1,236,551 |
The following table reconciles the statutory tax rate to the Company’s effective tax: SCHEDULE OF RECONCILIATION OF INCOME TAXES
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Net (loss) income before income taxes |  | $ | (3,123,898 | ) |  | $ | 5,063,433 |  |  | $ | 4,587,607 |  |  | $ | 7,816,387 |
Income tax at the federal statutory rate |  |  | 21 | % |  |  | 21 | % |  |  | 21 | % |  |  | 21 | %
Statutory U.S. federal income tax (recovery) provision |  |  | (656,018 | ) |  |  | 1,063,321 |  |  |  | 963,398 |  |  |  | 1,641,441 |
S Corporation benefits |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (642,278 | )
State margin tax |  |  | 17,736 |  |  |  | 39,113 |  |  |  | 101,473 |  |  |  | 83,349 |
Non-deductible expense |  |  | 16,617 |  |  |  | - |  |  |  | 27,657 |  |  |  | - |
Other adjustments |  |  | - |  |  |  | 3,612 |  |  |  | - |  |  |  | 154,039 |
Total |  | $ | (621,665 | ) |  | $ | 1,106,046 |  |  | $ | 1,092,528 |  |  | $ | 1,236,551 |
MASSIMO GROUP AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 14 — TAXES (continued) Corporate Income Taxes (continued) The Company’s deferred tax assets and liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
|  | September 30, 2024 |  |  | December 31, 2023 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for credit loss |  | $ | 16,480 |  |  | $ | 117,046 |
Property and equipment |  |  | 150,324 |  |  |  | 16,480 |
Lease liability – operating |  |  | 2,155,121 |  |  |  | 310,426 |
Lease liability – financing |  |  | 18,395 |  |  |  | 24,920 |
Other temporary difference |  |  | 750,467 |  |  |  | - |
Warranty liabilities |  |  | 127,814 |  |  |  | - |
Return liabilities |  |  | 34,370 |  |  |  | - |
Total deferred tax assets |  |  | 3,252,971 |  |  |  | 468,872 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Right of use assets – operating |  |  | (2,126,373 | ) |  |  | (310,426 | )
Right of use assets – financing |  |  | (17,306 | ) |  |  | (23,845 | )
Total deferred tax liabilities |  |  | (2,143,679 | ) |  |  | (334,271 | )
Deferred tax assets, net |  | $ | 1,109,292 |  |  | $ | 134,601 |

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