Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.2.2
INCOME TAXES
 12 Months Ended
Aug. 31, 2022
INCOME TAXES [Abstract]  
INCOME TAXES

NOTE 11 – INCOME TAXES

For the year ended August 31, 2022, Pure Cycle recorded income tax expense of $3.1 million, which consisted of current income tax expense of $3.6 million and deferred income tax benefit of $0.5 million. The deferred tax benefit consists mainly of timing difference between book and tax depreciation of fixed assets.

For the year ended August 31, 2021, Pure Cycle recorded income tax expense of $6.5 million, which consisted of current income tax expense of $5.8 million and deferred income tax expense of $0.7 million. The deferred tax expense consists of the usage of $0.6 million of net operating loss carryforwards and timing differences between book and tax depreciation of fixed assets.

During the year ended August 31, 2022, Pure Cycle made Federal and State income tax installments of $4.4 million and $0.9 million. During the year ended August 31, 2021, the Company did not make any Federal or State income tax installment payments.

Deferred income taxes reflect the tax effects of net operating loss carryforwards and 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 as of August 31 are as follows:

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(In thousands)

    

August 31, 2022

    

August 31, 2021

Deferred tax assets (liabilities):

    

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Depreciation and depletion

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$

(2,061)

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$

(2,360)

Non-qualified stock options

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568

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547

Accrued compensation

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​

279

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141

Deferred revenues

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108

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​

41

Other

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31

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16

Net deferred tax liability

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$

(1,075)

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$

(1,615)

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As of August 31, 2022 and 2021, the Company had no liability for unrecognized tax benefits.

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Income taxes computed using the federal statutory income tax rate differs from the Company’s effective tax rate primarily due to the following for the fiscal years ended August 31:

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Year Ended 

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August 31, 2022

    

August 31, 2021

Expected benefit from federal taxes at statutory rate of 21% for the years 2022 and 2021

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$

2,668

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$

5,584

State taxes, net of federal benefit

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​

456

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​

973

Permanent and other differences

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​

4

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​

4

Stock Compensation

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22

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(77)

Other

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(64)

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(4)

Total income tax expense

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$

3,086

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$

6,480

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At August 31, 2022 and 2021, the Company had no net operating loss carryforwards available for income tax purposes.