Global Water Resources Inc
For the period ended Dec 31, 2024. Filed Mar 5, 2025.
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FY2024 · Filed Mar 5, 2025
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14. INCOME TAXES
- INCOME TAXES
Judgment and the use of estimates are required in developing the provision for income taxes and reporting of tax-related assets and liabilities. The interpretation of tax laws and associated regulations involves uncertainty as taxing authorities may interpret the laws differently.
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Income Tax Expense
The components of income tax expense for the years ended December 31, 2024 and 2023 were as follows (in thousands):
| Years Ended December 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Current income tax expense | ||
| Federal | $460 | $478 |
| State | 140 | — |
| Total current | 600 | 478 |
| Deferred income tax expense | ||
| Federal | 1,294 | 1,965 |
| State | 179 | 429 |
| Total deferred | 1,473 | 2,394 |
| Income tax expense | $2,073 | $2,872 |
Statutory Rate Reconciliation
The following table represents a reconciliation of income tax expense at the statutory federal income tax rate to the actual income tax expense from continuing operations:
| Years Ended December 31, | ||||
|---|---|---|---|---|
| 2024 · 2023 | ||||
| Book income before taxes | $7,862 | $10,854 | ||
| Computed federal tax expense (benefit) at statutory rate | 1,651 | 21.0% | 2,274 | 21.0% |
| State income taxes - net of federal tax benefit | 318 | 4.0% | 429 | 4.0% |
| Tax regulatory asset amortization | 37 | 0.5% | 37 | 0.3% |
| Installment interest | 26 | 0.3% | 39 | 0.4% |
| Equity compensation | 25 | 0.3% | 98 | 0.9% |
| Other differences | 16 | 0.3% | (5) | (0.1)% |
| Income tax expense | $2,073 | 26.4% | $2,872 | 26.5% |
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Components of Net Deferred Income Tax Liability
The following table summarizes the Company’s temporary differences between book and tax accounting that give rise to the deferred tax assets and deferred tax liabilities, as of December 31, 2024 and 2023 (in thousands):
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Deferred tax assets | ||
| Net operating loss carry forwards | $— | $1,451 |
| Balterra intangible asset acquisition | 224 | 224 |
| Deferred gain on ICFA funds received | 5,352 | 4,889 |
| AIAC | 4,248 | 4,046 |
| Other | 1,353 | 1,286 |
| Total deferred tax assets | 11,177 | 11,896 |
| Net deferred tax asset | 11,177 | 11,896 |
| Deferred tax liabilities | ||
| Regulatory liability | (214) | (228) |
| CP Water intangible asset acquisition | (381) | (381) |
| ICFA intangible asset | (452) | (522) |
| Utility plant | (17,983) | (17,398) |
| Gain on condemnation of Valencia | (184) | (201) |
| Other Liabilities | (1,661) | (1,450) |
| Total deferred tax liabilities | (20,875) | (20,180) |
| Net deferred tax liability | $(9,698) | $(8,284) |
As of December 31, 2024, the Company hasno remaining net operating loss carry forwards andno uncertain tax positions.
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