Note 8: Income Taxes

The Company's income before income taxes was $1,339,000 and $1,610,000 for the years ended September 30, 2025 and 2024, respectively, and this income originated entirely in Pismo Beach, California. The provisions for income taxes for the years ended September 30, 2025 and 2024 are comprised of federal income taxes and California state income taxes as follows:

		September 30,
		2025		2024
Current:
Federal	$	284,000	$	297,000
State		132,000		169,000
		416,000		466,000

Deferred:
Federal		10,000		41,000
State		5,000		(12,000	)
		15,000		29,000
Total	$	431,000	$	495,000

The provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to income before income taxes is a result of the following differences:

		Year ended September 30
		2025				2024
Statutory federal tax rate		281,000		21%		338,000		21%
Non-deductible costs of shareholder usage		50,000		4%		44,000		3%
Provision to return adjustment		(4,000	)	-1%		(2,000	)	0%
Impact of state taxes, net		104,000		8%		115,000		7%
Total	$	431,000		32%	$	495,000		31%

At September 30, 2025 and 2024, the deferred income tax liabilities consisted of the following:

		Year ended September 30
		2025			2024
Deferred tax assets (liabilities):
Federal		(433,000	)		(423,000	)
State		(50,000	)		(45,000	)
Total	$	(483,000	)	$	(468,000	)

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. The majority of the balance is due to timing differences of depreciation expense, caused by the use of accelerated depreciation methods for tax calculations.

At September 30, 2025 and 2024, a summary of the significant components of the deferred tax assets and liabilities are as follows:

		Year ended September 30
		2025			2024
Depreciation	$	(575,000	)	$	(565,000	)
Right-of-use asset		(186,000	)		116,000
Lease liability		204,000			(116,000	)
Vacation accrual		10,000			14,000
Allowances		27,000			38,000
State taxes		37,000			45,000
	$	(483,000	)	$	(468,000	)

The Company has reviewed the impact of the "One Big Beautiful Bill Act" that was enacted on July 4, 2025. Based upon our review, we do not expect that this new law will have a material impact on the financial statements.

The Company has reviewed its tax positions and determined that no material uncertain tax positions exist for any of the reporting periods presented in these finacial statements. Accordingly, no liability for unrecognized tax benefits has been recorded in the accompanying balance sheets.

There were no net operating loss or tax credit carryforwards for the years ended September 30, 2025 or 2024 for federal or state. The Company has no open tax audits with any taxing authority as of September 30, 2025.