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Income Taxes | 12 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | 7. Income Taxes The Company files a consolidated federal income tax return and various state income tax returns. The amount of income taxes the Company records requires the interpretation of complex rules and regulations of federal and state taxing jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years prior to 2015. On December 22, 2017, the tax legislation referred to as the “Tax Cuts and Jobs Act” (the 2017 Tax Reform Act) was enacted. The more significant changes that impact the Company are the reduction in the corporate federal income tax rate from 35% to 21%. GAAP requires deferred income tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. The Company’s deferred income taxes were remeasured based upon the new tax rates which amounted to a $466,020 reduction in deferred tax asset and valuation amount. The 2017 Tax Reform Act reduced the corporate federal statutory income tax rate from 35% to 21% generally effective for tax years beginning on or after January 1, 2018. However, companies with fiscal years that include January 1, 2018 must use a blended rate. Our corporate federal statutory income tax rate will be 21% starting in fiscal 2019. Significant components of net deferred tax assets (liabilities) at March 31 are as follows:
|  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Percentage depletion carryforwards |  | $ | 1,111,801 |  |  | $ | 1,786,522 |
Deferred stock-based compensation |  |  | 33,581 |  |  |  | 52,654 |
Asset retirement obligation |  |  | 181,136 |  |  |  | 332,685 |
Net operating loss |  |  | 995,489 |  |  |  | 1,012,138 |
Other |  |  | 5,141 |  |  |  | 7,170 |
|  |  | 2,327,148 |  |  |  | 3,191,169 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Excess financial accounting bases over tax bases of property and equipment |  |  | 1,091,725 |  |  |  | 2,052,749 |
Deferred tax asset, net |  | $ | 1,235,423 |  |  | $ | 1,138,420 |
Valuation allowance |  |  | (1,235,423 | ) |  |  | (1,138,420 | )
Net deferred tax |  | $ | - |  |  | $ | - |
As of March 31, 2018, the Company has a statutory depletion carryforward of approximately $5,300,000, which does not expire. At March 31, 2018, the Company had a net operating loss carryforward for regular income tax reporting purposes of approximately $4,700,000, which will begin expiring in 2029. The Company’s ability to use some of its net operating loss carryforwards and certain other tax attributes to reduce current and future U.S. federal taxable income is subject to limitations under the Internal Revenue Code. A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, and we consider the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry. A reconciliation of the provision for income taxes to income taxes computed using the federal statutory rate for years ended March 31 follows:
|  | 2018 |  |  | 2017 |
Tax expense at federal statutory rate (1) |  | $ | (98,858 | ) |  | $ | (236,148 | )
Statutory depletion carryforward |  |  | (8,361 | ) |  |  | (67,801 | )
Change in valuation allowance |  |  | (362,908 | ) |  |  | 289,456 |
U. S. tax reform, corporate rate reduction |  |  | 466,020 |  |  |  | - |
Permanent differences |  |  | 3,506 |  |  |  | 14,497 |
Other |  |  | 601 |  |  |  | (4 | )
Total income tax |  | $ | - |  |  | $ | - |
Effective income tax rate |  |  | - |  |  |  | - |
| (1) | The federal statutory rate was 30.75% for fiscal year ending March 31, 2018 and 34% for fiscal year ending March 31, 2017.
For the years ended March 31, 2018 and 2017, the Company did not have any uncertain tax positions. A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:
|  | 2018 |  |  | 2017 |
Unrecognized tax benefits at beginning of period |  | $ | 745,000 |  |  | $ | 679,000 |
Change based on tax positions related to the current year |  |  | (745,000 | ) |  |  | 66,000 |
Changes to tax positions of prior years |  |  | - |  |  |  | - |
Settlements |  |  | - |  |  |  | - |
Expirations |  |  | - |  |  |  | - |
Unrecognized tax benefits at end of period |  | $ | - |  |  | $ | 745,000 |
While the amount of unrecognized tax benefits may change in the next 12 months, the Company does not expect any change to have a significant impact on its results of operations. The recognition of the total amount of the unrecognized tax benefits would have an impact on the effective tax rate. If these unrecognized tax benefits are disallowed, the Company will be required to pay additional taxes. Based on the material write-downs of the carrying value of our oil and natural gas properties for the year ending March 31, 2016, we are in a net deferred tax asset position for years ending March 31, 2018 and 2017. Our deferred tax asset is $1,235,423 as of March 31, 2018 with a valuation amount of $1,235,423. We believe it is more likely than not that these deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income are increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as expected future growth.

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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 + Details
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