INCOME TAXES

12 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 18 – INCOME TAXES

The income tax (provision) benefit for the periods shown consist of the following:

	2024		2023			2022
Current
US Federal	$	-	$	-		$	(1,302,811	)
US State		-		-			(446,677	)
Total current provision		-		-			(1,749,488	)
Deferred
US Federal		3,004,239		(578,679	)		(7,727,011	)
US State		786,824		(151,559	)		(2,649,261	)
Total deferred benefit		3,791,063		(730,238	)		(10,376,272	)
Change in valuation allowance		-		-			8,839,791
Income tax (provision) benefit	$	3,791,063	$	(730,238	)	$	(3,285,969	)

The reconciliation of income tax expense computed at the U.S. federal statutory rate of 21% to the income tax provision is as follows:

	2024			2023			2022
Computed tax expense		21	%		21	%		21	%
State taxes, net of Federal income tax benefit		5	%		6	%		7	%
Change in valuation allowance		0	%		0	%		(24	)%
Employee stock awards		(7	)%		(40	)%		4	%
Other		(1	)%		0	%		0	%
Stock and Warrants on Note Conversion		0	%		(5	)%		1	%
Total provision for income taxes		18	%		(18	)%		9	%

The Company’s effective tax rates was 18% for the year ended March 31, 2024. During the year ended March 31, 2024, the effective tax rate differed from the U.S. federal statutory rate primarily due to Employee stock awards.

Significant components of the Company’s deferred tax liabilities and assets are as follows:

	2024			2023
Deferred tax assets
Net operating loss carryforward	$	5,397,983		$	871,331
Loss on purchase		826,311			826,311
Other		314,257			-
Total deferred tax assets	$	6,538,461		$	1,697,642
Deferred tax liabilities
Depreciation expense	$	(3,007,227	)	$	(2,906,214	)
Other		(2,044,236	)		(1,101,020	)
Total deferred tax liabilities	$	(5,051,463	)	$	(4,007,234	)
Net deferred tax assets/(liabilities)	$	1,486,998		$	(2,309,592	)
Valuation allowance		-			-
Net deferred tax assets/(liabilities)	$	1,486,998		$	(2,309,592	)

The Company accounts for uncertain tax positions in accordance with ASC No. 740-10-25. ASC No. 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC No. 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. ASC No. 740-10-25 also requires management to evaluate tax positions taken by the Company and recognize a liability if the Company has taken uncertain tax positions that more likely than not would not be sustained upon examination by applicable taxing authorities. The Company has evaluated tax positions taken by the Company and has concluded that as of March 31, 2024 and 2023, there are no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability that would require disclosure in the financial statements.

The Company has never had an Internal Revenue Service audit; therefore, the tax periods ended December 31, 2016, December 31, 2017 and March 31, 2018, 2019, 2020, 2021, 2022, 2023, and 2024 are subject to audit.

AMMO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS