NOTE 6 – INCOME TAX

The Company is currently taxable as a C corporation and subject to federal and state corporate income taxes. The Company recorded a provision as follows:

The components of deferred tax assets and liabilities at December 31, 2025, 2024 and 2023 were as follows:

As of December 31, 2025 and 2024, the total amount of federal net operating loss carryforwards was approximately $4,648,908 and $2,889,156, respectively. The federal net operating loss carryforwards in the amount of $4,648,909 will not expire, but can only be used to offset 80% of taxable income. As of December 31, 2025 and 2024, the total amount of federal capital loss carryforwards was approximately $4,917,156 and $8,018,402, respectively. The federal capital loss carryforwards in the amount of $4,915,956 and $1,200 will expire in 2029 and 2028, respectively.

The recognition of a valuation allowance for deferred taxes requires management to make estimates and judgments about the Company’s future profitability which are inherently uncertain. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will not be realized. Management believes that the likelihood of realizing the benefits of these deductible differences at December 31, 2025, does not meet the “more likely than not threshold” as defined in ASC 740 – “Income Taxes” and thus management has recorded a full valuation allowance.

For federal and state purposes, a portion of the Company’s net operating loss carryforwards and basis differences may be subject to limitations on annual utilization in case of a change in ownership, as defined by federal and state law. The amount of such limitations, if any, has not been determined. Accordingly, the amount of such tax attributes available to offset future profits may be significantly less than the actual amounts of the tax attributes.

The difference between the tax provision (benefit) at the statutory federal income tax rate and the tax provision (benefit) before the adoption of ASU 2023-09 was as follows:

The difference between the tax provision (benefit) at the statutory federal income tax rate and the tax provision (benefit) after the adoption of ASU 2023-09 was as follows:

The Company did not meet the qualifications of a RIC for the 2025 tax year and will be taxed as a corporation under Subchapter C of the Code. It may not be in the best interests of the Company’s stockholders to elect to be taxed as a RIC at the present time due to the net operating losses and capital loss carryforwards the Company currently has. Management will make a determination that is in the best interests of the Company and its stockholders. As a RIC, the Company generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that the Company distributes to its stockholders as dividends and claims dividends paid deductions to compute taxable income. A RIC will not be eligible to utilize net operating losses. However, the net operating losses may become available should the Company disqualify as a RIC and become a C corporation in the future. In the event that the Company qualifies as a RIC, the Company itself will no longer be required to recognize deferred tax assets or liabilities.

In addition to meeting other requirements, the Company must generally distribute at least 90% of its investment company taxable income to qualify for the special treatment accorded to a RIC and, if the Company qualifies, to maintain its RIC status. As part of maintaining RIC status, undistributed taxable income (subject to a 4% excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared prior to the later of (1) the fifteenth day of the ninth month following the close of that fiscal year or (2) the extended due date for filing the federal income tax return for that fiscal year.

The Company did not have any unrecognized tax benefits as of the period presented herein. The Company identified its major tax jurisdiction as U.S. federal. For the years ended December 31, 2025, and 2024, no income tax expenses or related liabilities for uncertain tax positions were recognized for the Company’s open tax years from inception through 2025. The Company is not aware of any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will change significantly in the next 12 months. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In general, the federal and state income tax returns remain open to examination by taxing authorities for tax years beginning in 2021 to present.

On July 2, 2025, H.R.1 commonly referred to as the One Big Beautiful Bill Act (the “Act”), was enacted, which includes a broad range of tax reform provisions. There has not been, and nor do we anticipate, a material impact on our financial statements as a result of the enactment of this Act.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which intends to enhance transparency by providing more detailed tax disclosures to investors. ASU No. 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company adopted ASU 2023-09 on the required effective date for the Company’s financial statements issued for annual reporting periods beginning on January 1, 2025. The Company concluded that the adoption of this guidance did not have any material impact on its financial statements.

For the year ended December 31, 2025, the Company paid $456 to the State of Massachusetts as a minimum tax on the Company’s taxable income.