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Note 14 - Income Tax Provision | 12 Months Ended
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Dec. 31, 2025
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 14. INCOME TAX PROVISION The Company is operated as, and has elected to be taxed as, a REIT under Sections 856 to 860 of the Code. As a REIT, the Company is generally not subject to corporate level income taxes on REIT taxable income that is distributed to its shareholders. The Company accounts for income taxes under the asset and liability method under which it recognizes deferred income taxes, net of valuation allowances, if any, for the estimated future tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and its tax bases and net operating loss and tax credit carryforwards. The Company may, from time to time, be assessed interest or penalties by tax jurisdictions, although any such assessments historically have been minimal and immaterial to its financial results. In the event the Company has such an assessment from a taxing authority, it is its accounting policy to recognize any interest and penalties as a component of income tax. We, together with one of our entities, have elected to treat certain subsidiaries as a taxable REIT subsidiary (a “TRS”) for federal income tax purposes. Certain activities that we undertake must be conducted by a TRS, such as non-customary services for our tenants, and holding assets that we cannot hold directly. A TRS is subject to federal and state income taxes. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed any significant interest or penalties for tax positions by any tax jurisdictions. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The provision (benefit) for income taxes related to our TRS entities consists of the following for the years ended December 31, 2025 and 2024:
|  | December 31, 2025 |  |  | December 31, 2024 |
Current income tax expense (benefit) |  |  |  |  |  |  |  |
Federal |  | $ | (25,778 | ) |  | $ | (17,835 | )
State |  |  | 31,068 |  |  |  | 30,572 |
Total current income tax expense (benefit) |  |  | 5,290 |  |  |  | 12,737 |
Deferred income tax expense |  |  |  |  |  |  |  |
Federal |  |  | 424,119 |  |  |  | 40,279 |
State |  |  | 33,761 |  |  |  | 7,839 |
Total deferred income tax expense |  |  | 457,880 |  |  |  | 48,118 |
Total income tax (benefit) expense |  | $ | 463,170 |  |  | $ | 60,855 |
Income tax provision differed from the amount computed by applying the U.S. federal income tax rate of 21% to income (loss) before taxes, as follows:
|  | December 31, 2025 |  |  | December 31, 2024 |
Taxes at federal statutory rate |  | $ | 4,979 |  |  |  | 21.0 | % |  | $ | 103,369 |  |  |  | 21.0 | %
State and local income tax, net of federal income tax effect |  |  | 3,797 |  |  |  | 16.0 | % |  |  | — |  |  |  | 0.0 | %
Re-rate of state deferreds |  |  | 21,383 |  |  |  | 90.2 | % |  |  | 48,564 |  |  |  | 9.9 | %
REIT minimum state and local income tax |  |  | 20,468 |  |  |  | 86.3 | % |  |  | — |  |  |  | 0.0 | %
Other - Other investment write off |  |  | 382,622 |  |  |  | 1613.8 | % |  |  | — |  |  |  | 0.0 | %
Other - True-up adjustments |  |  | 7,115 |  |  |  | 30.0 | % |  |  | — |  |  |  | 0.0 | %
Other - Partnership basis true-up |  |  | 22,806 |  |  |  | 96.2 | % |  |  | (91,078 | ) |  |  | -18.5 | %
Total income tax expense |  | $ | 463,170 |  |  |  | 1954 | % |  | $ | 60,855 |  |  |  | 12.4 | %
The pretax income in our TRS for the years ended December 31, 2025 and 2024 totaled approximately $24,000 and $492,000, respectively. The tax effects of temporary differences which give rise to significant portions of deferred tax assets are as follows as of December 31:
|  | For The Years Ended |
|  | 2025 |  |  | 2024 |
Deferred Tax Assets |  |  |  |  |  |  |  |
Deferred Revenue |  | $ | 1,398 |  |  | $ | — |
State Taxes |  |  | — |  |  |  | 8 |
Fixed Asset |  |  | 145,680 |  |  |  | 243,662 |
Basis difference in investments |  |  | 9,027 |  |  |  | 54,974 |
Net operating loss |  |  | 68,952 |  |  |  | — |
Total deferred tax asset |  |  | 225,057 |  |  |  | 298,644 |
Deferred Tax Liabilities |  |  |  |  |  |  |  |
State Taxes |  |  | (912 | ) |  |  | — |
Prepaids |  |  | (757 | ) |  |  | — |
Net deferred tax assets |  |  | 223,388 |  |  |  | 298,644 |
Net deferred tax assets (liability) |  | $ | 223,388 |  |  | $ | 298,644 |
As of December 31, 2025, the Company had net operating loss carryforwards of $321,111 for federal, $36,361 for state income tax purposes. The Company's state loss carryforwards will begin to expire starting in 2041 if not utilized. Management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective positive evidence evaluated was the history of cumulative income for Model Homes Inc. incurred over the three-year period ended December 31, 2025. Such objective evidence provides support for no valuation allowance to be recorded for the year ended December 31, 2025. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves income tax disclosures through enhanced disaggregation within the rate reconciliation table and disaggregation of income taxes paid by jurisdiction. The amendment is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. The amendments should be applied on a prospective basis, however, retrospective application is permitted. The adoption of this ASU only impacted disclosures with no impact on the Company's consolidated financial statements.
Cash Taxes Paid (net of refunds) |  |  |  |
FEDERAL |  | $ | 29,009 |
STATE |  |  |  |
AL |  |  | 4,000 |
CA |  |  | 20,452 |
TX |  |  | 20,659 |
WI |  |  | 3,581 |
OTHER |  |  | 1,147 |
TOTAL |  | $ | 78,848 |

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