Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

INCOME TAXES

NOTE 13—INCOME TAXES

Ramaco Resources, Inc. is organized as a corporation under the laws of Delaware. Ramaco Resources, Inc. files a consolidated U.S. federal tax return with its wholly owned subsidiaries. All our operations are wholly within the United States, but our products are sold to customers worldwide.

Income tax expense consisted of the following:

	Years ended December 31,
(In thousands)	2023		2022		2021
Current taxes:
Federal	$	2,817	$	517	$	—
State		819		407		3
Current taxes		3,636		924		3
Deferred taxes:
Federal		17,323		28,389		6,518
State		1,391		840		(1,874)
Deferred taxes		18,714		29,229		4,644
Provision for income tax expense, net	$	22,350	$	30,153	$	4,647

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes were as follows:

	Years ended December 31,
(In thousands)	2023		2022		2021
Income taxes computed at the federal statutory rate	$	21,938	$	30,701	$	9,325
Effect of:
State taxes, net of federal benefits		1,210		1,422		796
State tax rate changes, net of federal benefits		350		(546)		(2,274)
Percentage depletion		(1,717)		(3,314)		(3,363)
Stock-based compensation		(3,395)		(1,499)		(194)
162(m) compensation limitation		5,716		3,481		—
Foreign-derived intangible income deduction		(1,475)		—		—
Other, net		(277)		(92)		357
Total	$	22,350	$	30,153	$	4,647

During the current year, there was a significant increase in the foreign-derived intangible income deduction related to our worldwide sales. The amount of excess tax benefits for stock-based compensation and subsequently the impact of IRC Section 162(m) for covered employees increased in the current year due to stock exercises.

Deferred tax assets and liabilities were as follows:

	December 31,
(In thousands)	2023		2022
Deferred tax assets:
Loss carryforwards U.S. - Federal/States	$	1,801	$	6,598
Asset retirement obligations		6,428		6,359
Accrued expenses		3,857		3,257
Stock-based compensation		2,916		2,249
Total deferred tax assets		15,002		18,463
Deferred tax liabilities:
Property, plant, and equipment		(69,354)		(54,100)
Net deferred tax liabilities	$	(54,352)	$	(35,637)

During the current period, the federal net operating loss carryforwards were fully utilized. As of December 31, 2023, there were no federal net operating loss carryforwards remaining. Total state loss carryforwards were approximately $35 million. The Company’s net operating loss carryforwards are not subject to statutory expiration.

No valuation allowance was recognized by the Company for deferred tax assets as of December 31, 2023 or December 31, 2022.

We are subject to federal, state, and local income taxes in the United States. Significant judgment is required in evaluating tax positions taken and determining the provision for income taxes. As of December 31, 2023, we do not have any unrecognized tax benefits. The tax years 2020 through 2022 remain subject to examination by the taxing authorities. We are not currently under examination by any taxing authorities.

Cash paid for income taxes totaled $15.5 million in 2022. The Company recognized an income tax receivable of $14.6 million included in prepaid expenses and other current assets at December 31, 2022. Cash paid for income taxes totaled $0.8 million for 2023 before consideration of refunds received. The Company received a refund of $11.8 million during 2023, which drove the decrease in prepaid expenses and other current assets on the balance sheet compared to December 31, 2022.