CRGI » Topics » Income Taxes

This excerpt taken from the CRGI 6-K filed Nov 20, 2006.

Income Taxes

Master Replicas was a limited liability company, taxed as a partnership, until May 31, 2004. Accordingly, until such time, for Federal and state income tax reporting purposes, profits and losses from the limited liability company were reported on the individual income tax returns of the members. Effective June 1, 2004, Master Replicas began being taxed as a “subchapter C” corporation. “Subchapter C” corporation income taxes are provided for the entire year for 2004 so that the tax effects of transactions reported in the Master Replicas financial statements for 2004 included in this proxy statement are consistent with 2005. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to depreciable assets (use of different depreciation methods and lives for financial statement and income tax purposes), certain nondeductible expense reserves and accruals, the current state tax deduction, and net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for tax credits that are available to offset future taxes payable.

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