Note 6 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 6 – INCOME TAXES

Components of deferred taxes are as follows:

	December 31,
	2021			2020
Assets:
Payables	$	13,306		$	---
Net Leasehold Reserves		164,509			144,013
Long-Lived Asset Impairment		1,163,085			1,059,416
Deferred Geological and Geophysical Expense		77,149			13,073
Unrealized Equity Securities and Capital Gains		123,336			---
Asset Retirement Obligation		347,850			313,296
Other		---			3,210
Total Assets		1,889,235			1,533,008
Liabilities:
Receivables		122,711			48,901
Intangible Drilling Costs		1,437,150			1,374,233
Unrealized Equity Securities and Capital Losses		---			43,295
Depletion and Depreciation		745,716			489,402
Investments		122,999			129,731
Other		11,979			16,073
Total Liabilities		2,440,555			2,101,635
Net Deferred Tax Asset/Liability	$	(551,320	)	$	(568,627	)

The following table summarizes the current and deferred portions of income tax provision/(benefit):

	Year Ended December 31,
	2021			2020
Current Tax Provision/(Benefit):
Federal	$	(38,552	)	$	(185,731	)
State		970			176
Total Current Benefit		(37,582	)		(185,555	)
Deferred Tax Benefit		(17,307	)		(348,738	)
Total Benefit	$	(54,889	)	$	(534,293	)

The total income tax provision/(benefit) expressed as a percentage of income before income tax was -5% for 2021 and 21% for 2020. These amounts differ from the amounts computed by applying the statutory U.S. federal enacted income tax rate of 21%for 2021 and 2020 as summarized in the following reconciliation:

	Year Ended December 31,
	2021			2020
Computed Federal Tax Provision/(Benefit)	$	251,036		$	(523,015	)
Increase (Decrease) in Tax from:
Allowable Depletion in Excess of Basis		(148,538	)		---
Federal Tax Carrybacks		(118,534	)		---
Dividend Received Deduction		(38,269	)		(891	)
State Income Tax Provision		970			176
Other		(1,554	)		(10,563	)
Income Tax Benefit	$	(54,889	)	$	(534,293	)
Effective Tax Rate		-5	%		21	%

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.