Note 4 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

4.    INCOME TAXES

A reconciliation between income taxes computed at the statutory federal income tax rate and the effective tax rate for the years ended December 31, 2024 and 2023 is as follows:

	2024			2023
Federal tax expense at statutory rates	$	637,700		$	3,145,900
Nondeductible lobbying expense		32,000			30,200
State expense, net of federal impact		275,700			1,204,200
Stock-based compensation expense		4,900			(52,500	)
Other		(26,415	)		89,200
Total income tax expense	$	923,885		$	4,417,000

Income tax expense (benefit) for the years ended December 31, 2024 and 2023 consists of the following:

	2024			2023
Current
Federal	$	522,900		$	931,000
State		674,000			660,000
		1,196,900			1,591,000
Deferred, Federal		51,985			1,961,700
Deferred, State		(325,000	)		864,300
Total income tax expense	$	923,885		$	4,417,000

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows:

	2024			2023
Deferred tax assets:
Vacation accrual	$	82,300		$	47,600
Player rewards program accrual		94,800			116,800
Stock-based compensation expense		160,200			135,900
Other		1,700			2,785
Net deferred tax assets		339,000			303,085
Deferred tax liabilities:
Land, building and equipment - cost and depreciation		(5,523,200	)		(5,352,900	)
Investment in equity investments		(3,468,100	)		(4,314,400	)
Prepaid expenses		(231,600	)		(169,500	)
TIF receivable accrued interest		(962,100	)		(766,300	)
Net deferred tax liabilities		(10,185,000	)		(10,603,100	)
Net long-term deferred tax liabilities	$	(9,846,000	)	$	(10,300,015	)

The Company is subject to U.S. and Minnesota taxation. The Company is no longer subject to U.S. federal or state by tax authorities for years before 2021 and 2020, respectively.

Unrecognized tax benefits — January 1, 2024	$	—
Gross increases — tax positions taken during the prior period		630,000
Gross decreases — tax positions taken during the current period		(449,000	)
Unrecognized tax benefits — December 31, 2024	$	181,000

The balances of unrecognized tax benefits as of December 31, 2024 and December 31, 2023 are $181,000 and $0, respectively, and if recognized, would result in adjustments to deferred taxes and would not impact the effective tax rate. It is reasonably expected that the total amounts of unrecognized tax benefits will fully reverse within 12 months of the reporting period.