Company: REI
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001628280-25-023254
Chunk: 106

Company: RING ENERGY, INC.
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 8
Chunk 106
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 consider whether a valuation allowance should be recorded for some or all of the deferred tax assets which may not be realized. The ultimate realization of deferred tax assets is assessed at each reporting period and is dependent upon the generation of future taxable income and the Company’s ability to utilize operation loss carryforwards during the periods in which the temporary differences become deductible. We also consider the reversal of deferred tax liabilities and available tax planning strategies. As of March 31, 2025 and December 31, 2024, the Company did not carry a valuation allowance against its federal and state deferred tax assets. The Company recorded the following federal and state income tax benefits (provisions) for the three months ended March 31, 2025 and 2024.  

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For the Three Months EndedMarch 31, 2025March 31, 2024Deferred federal income tax benefit (provision)$(2,816,078)$(1,551,759)Current state income tax benefit (provision)(136,393)(102,633)Deferred state income tax benefit (provision)(88,706)(74,494)Benefit from (Provision for) Income Taxes$(3,041,177)$(1,728,886)Effective tax rate (1)25.03%23.87%(1) The Company’s overall effective tax rate is calculated as Benefit from (Provision for) Income Taxes divided by Income Before Benefit from (Provision for) Income Taxes. The effective tax rates for the three months ended March 31, 2025 and 2024 were higher than the federal statutory corporate tax rate, primarily impacted by the state income taxes.

Accounting for Uncertainty in Income Taxes – In accordance with GAAP, the Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns for the open tax years. The Company has identified its federal income tax return and its franchise tax return in Texas in which it operates as a “major” tax jurisdiction. The Company’s federal income tax returns for the years ended December 31, 2020 and after remain subject to examination. The Company’s federal income tax returns for the years ended December 31, 2008 and after remain subject to examination to the extent of the net operating loss (NOL) carryforwards. The Company’s franchise tax returns in Texas remain subject to examination for 2019 and after. The Company currently believes that all significant filing positions are highly certain and that all of its significant income