INCOME TAXES |
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| INCOME TAXES | NOTE 10 – INCOME TAXES:
On July 4, 2025, the enactment of the One Big Beautiful Bill Act ("OBBBA") into law, marked a significant legislative development, resulting in substantial modifications to the U.S. tax code. The OBBBA influences multiple facets of taxation, including, but not limited to, maintaining the 21 percent corporate tax rate and makes permanent many of the beneficial expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017, including the immediate expensing of domestic research and development expenditures, more favorable interest deductibility and 100 percent bonus depreciation with effective dates in 2025. Revisions to the international tax framework are effective in 2026. The income taxes reported for the year ended December 31, 2025 incorporate all relevant tax provisions of this new law.
Income of the Company is taxed according to the federal tax laws in the US and the relevant state laws. The U.S tax rate in 2025 and 2024 is 26.9% comprising U.S statutory tax rates of 21% and state tax rate of 5.9%. For the years ended years ended December 31, 2025 and 2024, the Company’s effective tax rate is below the federal statutory income tax rate of 21% primarily due to state income taxes, net of federal benefit and the Company’s position to establish a full valuation allowance on its deferred tax assets.
The applicable corporate tax rate for the Company is 21%. As of December 31, 2025, the Company has an accumulated tax loss carryforward of approximately $56.1 million (as of December 31, 2024, $43.0 million). Under U.S. tax laws, subject to certain limitations, carryforward tax losses originating in tax year have no expiration date, but they are limited to 80% of the company’s taxable income in any given tax year. A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows:
The Company has not been taxed since its inception.
The tax effect of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and liabilities are presented below:
As the achievement of required future taxable income is not likely, the Company recorded a full valuation allowance. The following table presents a reconciliation of the beginning and ending valuation allowance:
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