Note

–

INCOME TAXES

Components of deferred taxes are as follows:

	December 31,
	2019			2018
Assets:
Net Leasehold Impairment Reserves	$	257,389		$	127,906
Gas Balance Receivable		32,352			32,352
Long-Lived Asset Impairment		806,364			936,272
Deferred Geological and Geophysical Expense		17,087			38,367
Other		318,734			224,670
Total Assets		1,431,926			1,359,567
Liabilities:
Receivables		76,891			72,807
Intangible Drilling Costs		1,546,222			1,741,413
Depletion, Depreciation and Other		726,178			755,618
Total Liabilities		2,349,291			2,569,838
Net Deferred Tax Liability	$	(917,365	)	$	(1,210,271	)

The decrease in the deferred tax liability for

2019

reflected in the above table is primarily the result of the decrease in intangible drilling costs.

The following table summarizes the current and deferred portions of income tax expense:

	Year Ended December 31,
	2019			2018
Current Tax Provision/(Benefit):
Federal	$	68,198		$	96,443
State		1,633			(784	)
Total Current Provision		69,831			95,659
Deferred Tax Provision/(Benefit)		(292,906	)		292,221
Total Provision/(Benefit)	$	(223,075	)	$	387,880

The total income tax provision/(benefit) expressed as a percentage of income before income tax was

46%

for

2019

and

14%

for

2018.

These amounts differ from the amounts computed by applying the statutory U.S. federal enacted income tax rate of

21%

for

2019

and

2018

as summarized in the following reconciliation:

	Year Ended December 31,
	2019			2018
Computed Federal Tax Provision/(Benefit)	$	(102,866	)	$	567,330
Increase (Decrease) in Tax From:
Allowable Depletion in Excess of Basis		(60,224	)		(192,979	)
Dividend Received Deduction		(4,443	)		(305	)
State Income Tax Provision/(Benefit)		(1,633	)		784
Other		(53,909	)		13,050
Income Tax Provision/(Benefit)	$	(223,075	)	$	387,880
Effective Tax Rate		46	%		14	%

Excess federal percentage depletion, which is limited to certain production volumes and by certain income levels, reduces estimated taxable income projected for any year. When a provision for income taxes is recorded, federal excess percentage depletion benefits decrease the effective tax rate. When a benefit for income taxes is recorded, federal excess percentage depletion benefits increase the effective tax rate. The benefit of federal excess percentage depletion is

not

directly related to the amount of pre-tax income recorded in a period. Accordingly, in periods where a recorded pre-tax income is relatively small or a pre-tax loss, the proportional effect of these items on the effective tax rate

may

be significant.