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TAXES
 12 Months Ended
Dec. 31, 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 period 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 is subject to a combined effective tax rate for federal income taxes of 21% and state margin tax.

 

As of December 31, 2024 and 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 years ended December 31, 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 years ended December 31, 2024 and 2023 are 27.1% and 17.0% respectively.

 

The provision for income tax consists of the following:

 

   2024   2023 
   Years Ended 
   December 31, 
   2024

(restated)

   2023 
         
Income tax provision – current  $1,646,771   $2,264,405 
Income tax recovery - deferred   (992,013)   (43,137)
Deferred tax adjustment – change of tax rates   -    

(91,464

)
Income tax provision  $654,758   $2,129,804 

 

The following table reconciles the statutory tax rate to the Company’s effective tax:

 

   2024   2023 
   Years Ended 
   December 31, 
   2024

(restated)

   2023 
         
Net income before income taxes  $2,416,667   $12,545,029 
Income tax at the federal statutory rate   21%   21%
Statutory U.S. federal income tax provision   507,500    2,634,456 
S Corporation benefits   -    (553,133)
State margin tax   32,561    139,945 
Non-deductible expense   40,048    - 
Prior year true-up   74,649    - 
Deferred tax adjustment – change of tax rates   -    (91,464)
Total  $654,758   $2,129,804 

 

 

MASSIMO GROUP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 14 — TAXES (continued)

 

Corporate Income Taxes (continued)

 

The Company’s deferred tax assets and liabilities consist of the following:

 

   December 31, 2024 (restated)   December 31, 2023 
Deferred tax assets:          
Allowance for credit loss  $80,680   $117,046 
Property and equipment   16,480    16,480 
Lease liability – operating   2,001,843    310,426 
Lease liability – financing   16,175    24,920 
Other temporary difference   1,018,553    - 
Total deferred tax assets   3,133,731    468,872 
Deferred tax liabilities:          
Right of use assets – operating   (1,992,039)   (310,426)
Right of use assets – financing   (15,078)   (23,845)
Total deferred tax liabilities   (2,007,117)   (334,271)
Deferred tax assets, net  $1,126,614   $134,601