v3.26.1
FEDERAL INCOME TAX MATTERS
 12 Months Ended
Dec. 31, 2025
FEDERAL INCOME TAX MATTERS  
FEDERAL INCOME TAX MATTERS

(6) FEDERAL INCOME TAX MATTERS

 

Deferred income tax assets and liabilities are recorded based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. For the tax years ended December 31, 2025 and 2024, the Company’s U.S Federal statutory tax rate was 21%. The Company is also subject to the Texas Gross Margin tax of 0.75% of modified taxable income as determined for Texas purposes. This combination results in a marginal blended tax rate of approximately 21.6%.

 

At each of December 31, 2025, and 2024, the tax effected amount of U.S. Federal net operating loss carryforwards (“NOLs”) totaled $7.5 and $6.8 million respectively. As of December 31, 2025, $1.4 million in NOLs will begin to expire in varying amounts between 2036 and 2037, and the remaining $6.1 million can be carried forward indefinitely.

 

The Company has determined, after weighing both positive and negative evidence, that the net deferred tax asset (DTA) for the Company is not more-likely- than-not to be realizable. Therefore, a valuation allowance of $7.9 million was established at December 31, 2025 to completely offset the DTA as of that date.

 

During the current period, the Company has estimated a taxable loss. This NOL will be carried forwarded indefinitely with no expiration and is fully offset with a valuation allowance. As such, the Company has not recorded any current income tax expense or benefit for the period. All of the Company’s federal and state tax returns for 2021 through 2024 remain open to examination.

 

The provision for income taxes for the years ended December 31, 2025 and 2024, respectively, consisted of the following:

 

 

 

Years Ended December 31,

 

 

 

2025

 

 

2024

 

Current:

 

 

 

 

 

 

Federal

 

$-

 

 

$-

 

State

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

—

 

Deferred:

 

 

 

 

 

 

 

 

Federal

 

 

—

 

 

 

—

 

State

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

—

 

Total income tax benefit (provision)

 

$-

 

 

$-

 

The actual income tax benefit (provision) differs from the expected income tax benefit (provision) as computed by applying the United States federal corporate income tax rate of 21% for the periods indicated below, as follows:

 

 

 

2025

 

U.S. Federal Statutory Rate

 

 

(2,974,537)

 

 

21.00%

 

 

 

 

 

 

 

 

 

State & Local Income Taxes, Net of Federal Income Tax Effect
State income taxes - Other, Net

 

 

-

 

 

 

-

 

State Change in Valuation Allowance

 

 

-

 

 

 

-

 

State income taxes - 2024 Return to Provision

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Changes in Valuation Allowances

 

 

2,972,558

 

 

 

(20.99)%
Nontaxable or Nondeductible Items

 

 

 

 

 

 

 

 

Federal RTP

 

 

21

 

 

 

-

 

Other, net

 

 

1,958

 

 

 

(0.01)%
Effective Tax Rate

 

 

-

 

 

 

-

 

 

 

 

 

2024

 

U.S. Federal Statutory Rate

 

 

(3,939,998)

 

 

21.00%

 

 

 

 

 

 

 

 

 

State & Local Income Taxes, Net of Federal Income Tax Effect
State income taxes - Other, Net

 

 

-

 

 

 

-

 

State Change in Valuation Allowance

 

 

-

 

 

 

-

 

State income taxes - 2024 Return to Provision

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Changes in Valuation Allowances

 

 

4,892,336

 

 

 

-26.08%
Nontaxable or Nondeductible Items

 

 

 

 

 

 

 

 

Change in Tax Status

 

 

(954,402)

 

 

5.09%
Federal RTP

 

 

128

 

 

 

-

 

Other, net

 

 

1,935

 

 

 

-0.01%
Effective Tax Rate

 

 

-

 

 

 

-

 

 

The components of the net deferred income tax assets (liabilities) recognized are as follows:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

Deferred noncurrent income tax assets:

 

 

 

 

 

 

 

Net operating loss carry-forwards

 

$7,447,515

 

 

$6,754,679

 

 

$6,093,795

 

Charitable Contributions

 

 

6,426

 

 

 

4,347

 

 

 

3,297

 

Capital loss carry-forwards

 

 

1,440,810

 

 

 

—

 

 

 

 

 

Other

 

 

182

 

 

 

—

 

 

 

 

 

Gross deferred noncurrent income tax assets

 

 

8,894,933

 

 

 

6,759,026

 

 

 

6,097,092

 

Valuation allowance

 

 

(7,864,894)

 

 

(4,892,336)

 

 

(954,402)

Deferred noncurrent income tax assets

 

$1,030,039

 

 

$1,866,690

 

 

$5,142,690

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred noncurrent income tax liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized Gain/Loss

 

$(1,030,039)

 

$(1,866,690)

 

$(5,142,690)

Other

 

 

—

 

 

 

—

 

 

 

 

 

Deferred noncurrent income tax liabilities

 

$(1,030,039)

 

$(1,866,690)

 

$(5,142,690)

Net noncurrent deferred income tax assets (liabilities)

 

$—

 

 

$—

 

 

$—

 

The Fund’s accounting policy related to income tax penalties and interest assessments is to accrue for these costs and record a charge to income tax expenses during the period that the Fund takes an uncertain tax position through resolution with the taxing authorities or expiration of the applicable statute of limitations.

 

All of the Fund’s federal and state tax returns for 2021 through 2024 remain open to examination. We believe that there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within twelve months of the reporting date.