v3.26.1
Income Tax
 12 Months Ended
Dec. 31, 2025
Income Tax  
Income Tax

Note 7. Income Tax

 

The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740, Income Taxes (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the years ended December 31, 2025 and 2024. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the period presented. The Company had no accruals for interest and penalties at December 31, 2025 or 2024.

 

The Company’s federal income tax returns for the years ended December 31, 2022 through December 31, 2025 remain subject to examination by the Internal Revenue Service as of December 31, 2025.

 

During 2025 and 2024, the Company incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved.

 

Net deferred tax assets consist of the following components as of December 31, 2025 and 2024:

 

 

 

2025

 

 

2024

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryover

 

$5,617,500

 

 

$5,310,500

 

Accrued related party payroll

 

 

24,000

 

 

 

37,500

 

Valuation allowance

 

 

(5,641,500 )

 

 

(5,348,000 )

Net deferred tax asset

 

$-

 

 

$-

 

 

The income tax provision differs from the amount of income tax determined by applying the U.S federal income tax rate (21%) for the years ended December 31, 2025 and 2024 due to the following:

 

 

 

2025

 

 

2024

 

Book income

 

$(560,600 )

 

$(420,400 )

Related party accrued payroll

 

 

24,000

 

 

 

37,500

 

(Gain) Loss on debt settlement

 

 

-

 

 

 

(24,200 )

Stock for services and compensation

 

 

235,200

 

 

 

78,800

 

Interest amortization

 

 

300

 

 

 

-

 

Inventory write-off

 

 

-

 

 

 

7,100

 

Other income

 

 

(6,000 )

 

 

-

 

Valuation allowance

 

 

307,100

 

 

 

321,200

 

Income tax expense

 

$-

 

 

$-

 

 

As of December 31, 2025 and 2024, the Company has taxable net loss carryovers of approximately $27 million and $25.2 million, respectively that may be offset against future taxable income.