Ring Energy, Inc. General form of registration statement for all companies including face-amount certificate companies

General form of registration statement for all companies including face-amount certificate companies

INCOME TAXES

INCOME TAXES

12 Months Ended

Dec. 31, 2013

Dec. 31, 2012

INCOME TAXES

INCOME TAXES

NOTE 11 INCOME TAXES

For the year ended December 31, 2013 and 2012, the Company calculated a net tax benefit of $516,531 and $300,324, respectively. The benefit from income taxes consisted of the following:

Provision for Income Taxes	2013		2012
Deferred	$	77,701	$	(707,270)
Effect of offset from Kansas property acquisition		-		406,946
	$	77,701	$	(300,324)

The following is a reconciliation of income taxes computed using the U.S. federal statutory rate to the provision for income taxes:

Rate Reconciliation	2013		2012
Tax at federal statutory rate (34%)	$	(127,333)	$	(669,666)
Non-deductible expenses		4,450		1,098
True-up prior return		213,431		406,946
States taxes, net of Federal benefit		17,864		(93,950)
Effect of tax rates lower than statutory rate		5,017		55,248
	$	77,701	$	(300,324)

As of December 31, 2013, the Company had net operating loss carry forwards for federal income tax reporting purposes of approximately $17.8 million which, if unused, will expire in 2033.

The net deferred tax liability consisted of the following at December 31, 2013 and 2012:

Deferred Taxes:		2013		2012
Deferred tax liabilities
	Property and equipment	$	9,009,106	$	3,094,811

Deferred tax assets
	Stock-based compensation		1,682,601		386,541
	Operating loss and IDC carryforwards		6,622,853		2,082,319
	Deferred tax assets		8,305,439		2,468,860
Net deferred income tax liability		$	703,651	$	625,951

Accounting for Uncertainty in Income Taxes In accordance with generally accepted accounting principles, the Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns for the open tax years in such jurisdictions. The Company has identified its federal income tax return and its state income tax returns in Texas and Kansas in which it operates as major tax jurisdictions. The Companys federal income tax returns for the years ended December 31, 2010 through 2012 remain subject to examination. The Companys income tax returns in Kansas remain subject to examination for years ended December 31, 2010 through 2012. The Companys income tax returns in Texas remain subject to examination for years ended 2009 through 2012. The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions and no adjustments to such reserves were required by generally accepted accounting principles. No interest or penalties have been levied against the Company and none are anticipated; therefore, no interest or penalty has been included in our provision for income taxes in the consolidated statements of operations.

INCOME TAXES.

NOTE 11 INCOME TAXES

Through December 31, 2011, Stanford Energy, Inc. and the predecessor were not taxable entities for U.S. federal income tax purposes. Under Stanford Energy, Inc.s S-corporation election and the predecessors tax status, income taxes were generally borne by the shareholders/owners and losses were generally deductible at the shareholder/owner level. Accordingly, as of December 31, 2011, no recognition has been given to federal income tax or benefit in the accompanying financial statements.

For the year ended December 31, 2012, the Company calculated a net tax benefit of $300,324. The benefit from income taxes consisted of the following:

Benefit From Income Taxes		2012		2011
Deferred	$	(707,270)	$	-
Effect of offset from Kansas property acquisition		406,946
	$	(300,324)	$	-

The following is a reconciliation of income taxes computed using the U.S. federal statutory rate to the provision for income taxes:

Rate Reconciliation		2012		2011
Tax at federal statutory rate (34%)	$	(669,666)	$	24,306
Non-deductible expenses		1,098		(24,306)
Effect of offset from Kansas property acquisition		406,946		-
States taxes, net of Federal benefit		(93,950)		-
Effect of tax rates lower than statutory rate		55,248		-
	$	(300,324)	$	-

As of December 31, 2012, the Company had net operating loss carry forwards for federal income tax reporting purposes of approximately $5.6 million which, if unused, will expire in 2032.

The net deferred tax liability consisted of the following at December 31, 2012 and 2011:

Deferred Taxes:			2012		2011
Deferred tax liabilities
	Property and equipment	$	3,094,811	$	-

Deferred tax assets
	Stock-based compensation		386,541		-
	Operating loss and IDC carryforwards		2,082,319		-
	Deferred tax assets		2,468,860		-
Net deferred income tax liability		$	625,951	$	-

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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