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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:

  

   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:

  

   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:

 

   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