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

9. Income Taxes

 

The Company files a consolidated return with its subsidiaries TRLS and AIS. The Company’s other subsidiary TRLIC files a separate federal return for life insurance companies. TRLIC is taxed as a life insurance company under the provisions of the Internal Revenue Code. Life insurance companies must file separate tax returns until they have been a member of the consolidated filing group for five years. Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.

 

For financial reporting purposes, net loss before income taxes was $557,341 and $716,878 for the years ended December 31, 2025 and December 31, 2024. The provision for income taxes consisted of $0 current taxes and $0 deferred taxes as of December 31, 2025 and December 31, 2024.

 

The reconciliation of federal statutory income tax to the Company’s provision for income taxes as of December 31, 2025 and December 31, 2024:

 

   Year Ended
December 31,		   Year Ended
December 31,		 
   2025   2024 
       (Restated) 
Expected provision at statutory federal rate  $(117,042)  $(150,544)
Permanent differences   1,583    1,205 
Permanent return to provision adjustments   69,551    - 
Deferred true-ups   (93,102)   48,058 
Change in valuation allowance   139,010    101,281 
Total provision for income taxes  $-   $- 

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and December 31, 2024 are as follows:

 

   Year Ended
December 31,		   Year Ended
December 31,		 
   2025   2024 
(In thousands)        
Deferred tax assets:        
Net operating loss carryforwards  $3,712   $3,742 
Reserves   364    451 
Investments - unrealized   23    63 
Other   65    62 
Gross deferred tax assets   4,164    4,318 
Valuation allowance   (3,192)   (3,329)
Net deferred tax assets  $972   $989 
           
Deferred tax liabilities:          
Deferred acquisition costs   (872)   (784)
Other   (100)   (205)
Net deferred tax liabilities  $(972)  $(989)
           
Net deferred tax asset (liability)  $-   $- 

 

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing DTAs. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

 

On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $3.2 million has been recorded to recognize only the portion of the DTA that is more likely than not to be realized. The amount of the DTA considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

 

As of December 31, 2025, we had total net operating loss carryforwards of $19.1 million. Some of these net operating loss carryforwards, if unused, will begin to expire in 2031.

 

2031-2037  $4,172,660 
Indefinite lived   14,954,690 
Total  $19,127,350 

 

We believe that it is more likely than not that the benefit from these NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance on the DTAs related to these NOL carryforwards.

 

Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of our domestic NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities.

 

The Company and its subsidiaries have no known uncertain tax benefits within its provision for income taxes. In addition, the Company does not believe it would be subject to any penalties or interest relative to any open tax years and, therefore, have not accrued any such amounts. The Company files U.S. federal income tax returns, income tax returns in various state jurisdictions, and franchise tax returns in the state of Texas. The 2022 through 2024 U.S. federal tax years are subject to income tax examination by tax authorities. The Company classifies any interest and penalties (if applicable) as income tax expense in the financial statements.