v3.26.1
Income Tax
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Tax

Note 12 – Income Tax

 

The Company provides for income tax under ASC 740, “Income Taxes” under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 

The Company is incorporated in the State of Nevada and is not subject to tax on income or capital gains under current Nevada law. In addition, upon payments of dividends by these entities to their shareholders, no Nevada withholding tax will be imposed.

 

The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the new federal statutory rate of 21% and state of Florida tax rate of 5.5% to the income tax amount recorded for the three months ended March 31, 2026 and 2025 are as follows:

 

Taxation in the statements of income represents:

 

  

2026

(unaudited)

  

2025

(unaudited)

 
  

Three months ended

March 31

 
  

2026

(unaudited)

  

2025

(unaudited)

 
Tax provision for the period:          
Current  $-   $- 
Deferred          
● Federal statutory tax          
- Deferred tax assets          
- utilization of NOLs brought forward   74,671    106,389 
- Deferred tax liabilities          
- (reversal) recognition for the period   (2,530)   7,985 
Deferred tax assets Liabilities   72,141    114,374 
● State of Florida tax          
- Deferred tax assets          
- utilization of NOLs brought forward   19,557    27,469 
- Deferred tax liabilities          
- (reversal) recognition for the period   (663)   2,486 
Deferred tax assets Liabilities   18,894    29,955 
           
Total income tax expenses  $91,035   $144,329 

 

 

A reconciliation of the effective income tax rates reflected in the accompanying unaudited condensed consolidated statements of income to the federal statutory rate of 21% for the three months ended March 31, 2026 and 2025 are as follows:

  

  

2026

(unaudited)

  

2025

(unaudited)

 
  

Three months ended

March 31

 
  

2026

(unaudited)

  

2025

(unaudited)

 
         
Federal statutory tax rate   21.0%   21.0%
Effect of state of Florida tax   (1.6)%   7.3%
State tax effect of jurisdictional mix*   (27.0)%   6.9%
Effect of British Virgin Islands tax   0.0%   0.0%
Permanent difference   (0.2)%   0.0%
Effective tax rate   (7.8)%   35.2%

 

* It represents the effect on the consolidated effective tax rate from expenses incurred and taxable income generated by Florida operations. Nevada does not impose corporate income tax.

 

The Company computes its interim income tax provision using the estimated annual effective tax rate method under ASC 740-270, adjusted for discrete items, if any. For the three months ended March 31, 2026, the Company recorded income tax expense of $91,035 despite a pre-tax book loss, primarily due to taxable income generated by Florida operations, utilization of net operating loss carryforwards, state tax effects, and permanent or non-deductible book-tax differences, including stock-based compensation as applicable. The Company’s effective tax rate differs from the U.S. federal statutory rate primarily due to state income taxes, jurisdictional mix, permanent differences, and utilization of NOL carryforwards. There were no material changes to the Company’s uncertain tax positions during the three months ended March 31, 2026.

 

Significant components of the deferred tax assets and deferred tax liabilities are presented below:

 

  

March 31, 2026

(unaudited)

  

December 31, 2025

(audited)

 
Deferred tax liabilities:          
Accelerated depreciation          
Federal statutory tax:          
Beginning of the period/year  $40,760   $48,132 
(Reversal) recognized during the period/year   (2,530)   (7,372)
End of the period/year   38,230    40,760 
State of Florida tax:          
Beginning of the period/year   10,037    11,982 
(Reversal) recognized during the period/year   (663)   (1,945)
End of the period/year   9,374    10,037 
Deferred tax liabilities  $47,604   $50,797 
           
Deferred tax assets:          
Net operating losses          
Federal statutory tax:          
Beginning of the period/year  $251,827   $186,759 
Recognized during the period/year   -    65,068 
Utilized during the period/year   (74,671)   - 
End of the period/year   177,156    251,827 
           
State of Florida tax:          
Beginning of the period/year  $57,420    40,393 
Recognized during the period/year   -    17,027 
Utilized during the period/year   (19,557)   - 
End of the period/year   37,863    57,420 
           
Less: valuation allowance   -    - 
Deferred tax assets, net  $215,019   $309,247 

 

 

The Group evaluated the recoverable amounts of deferred tax assets to the extent that future taxable profits will be available against which the net operating loss and temporary difference can be utilized.

 

As of March 31, 2026, the Company had $811,392 of NOLs which can be carried forward indefinitely.

 

The NOLs carry forwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382.