v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 13—INCOME TAXES 

 

As of December 31, 2025 and 2024, the Company had net operating loss carry forwards of $48,059,205 and $4,615,303, respectively, that may be available to reduce future years’ taxable income. As of December 31, 2025, the Company has a net deferred tax asset of $13,964,902.

 

Deferred income tax assets and liabilities at December 31, 2025 and 2024, consisted of the following temporary differences and carry-forward items:

 

   December 31, 2025   December 31, 2024 
Deferred tax assets          
Deductible temporary differences, net  $9,828,985   $974,718 
Loss carryforwards   48,059,205    4,615,303 
Expected tax rate   24.6%   24.6%
Total deferred tax assets   14,237,311    1,374,838 
           
Deferred tax liabilities          
Deductible temporary differences, net   1,107,601    989,890 
Expected tax rate   24.6%   24.6%
Total deferred tax liabilities   272,409    243,459 
           
Deferred tax valuation allowance   (13,964,902)   (1,131,379)
Net deferred tax asset  $-   $- 

 

The components for the income tax expense:

   December 31, 2025   December 31, 2024 
Taxable income          
Financial statement pretax loss  $(52,228,923)  $(3,239,916)
Non-deductible expenses   48,465    8,978 
Total taxable income   (52,180,458)   (3,230,938)
           
Decrease (increase) in taxable temporary differences   (117,711)   (756,932)
Increase in deductible temporary differences   8,854,267    912,718 
Federal taxable loss  $(43,443,902)  $(3,075,152)

 

The valuation allowance roll forward as of December 31 is as follows:

 

   2025   2024 
Beginning balance  $1,131,379   $359,434 
Increase due to current year activity   12,833,523    771,945 
Ending balance  $13,964,902   $1,131,379 

 

The schedule of effective tax rate reconciliation is as follows:

 

Year ended December 31,  2025   2024 
Federal statutory rate   21.0%  $10,968,074    21.0%  $(680,382)
State income tax rate, net of federal benefit   3.6%   1,877,369    3.6%   (116,459)
Permanent differences   (0.0)%   (11,920)   (0.1)%   2,208 
Effect of tax rate change   0.0%   -    (0.7)%   22,688 
Change in valuation allowance   (24.6)%   (12,833,523)   (23.8)%   771,945 
    0.0%  $-    0.0%  $- 

 

 

Digital assets, in general are treated as property for U.S. Federal income tax purposes. However, the Company recognizes that digital assets can be tokenized in which case the underlying asset being tokenized would govern the tax treatment. As such, the Company generally does not recognize tax impacts on the unrealized gain or losses from digital assets. The Company generally incurs tax impacts when digital assets are sold or exchanged.

 

Cash paid for income taxes, net of refunds, was $0 and $0 for the years ended December 31, 2025 and 2024, respectively.

 

As of December 31, 2025 and 2024, the Company had no unrecognized tax benefits and did not have any accrued interest or penalties related to uncertain tax positions. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next twelve months. The valuation allowance represents the portion of our deferred tax assets for which it is more likely than not that the benefit of such items will not be realized.

 

The Company files income tax returns in the U.S. federal jurisdiction and the state of Utah. The Company’s tax years 2022 to current year remain open to examination by the major taxing authorities.