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

NOTE 12 - Income Tax

 

The components of income taxes expense are as follows:

 

Effective Tax Rate Reconciliation for the Three Months Ended March 31, 2026
Pretax book income  $1,133,140    21.00%  $237,959 
Permanent differences   24,113    0.45%   5,064 
Prior year federal permanent differences true-up   110,378    2.05%   23,179 
State income tax   58,036    0.14%   1,558 
Other deferred adjustment   -    3.70%   41,898 
Total tax expense        27.33%  $309,658 

 

 

HOUR LOOP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Effective Tax Rate Reconciliation for the Three Months Ended March 31, 2025
Pre-tax book income  $935,936    21.00%  $196,547 
Permanent differences   18,862    0.42%   3,961 
Prior year federal permanent differences true-up   117,653    2.64%   24,707 
State income tax   42,326    4.38%   40,984 
Other deferred adjustment   -    1.63%   15,220 
Total tax expense        30.07%  $281,419 

 

   Current   Deferred
Income Tax		   Total 
   Income Tax   Expense   Income Tax 
Tax Expense Summary, for the Three Months Ended March 31, 2026  Expense  

(Benefit)

   Expense 
Federal  $40,408    255,504    295,912 
State   58,036    (44,290)   13,746 
Total tax expense  $98,444    211,214    309,658 

 

Tax Expense Summary, for the Three Months Ended March 31, 2025 

Current

Income Tax

Expense

  

Deferred

Income Tax

Expense

  

Total

Income Tax

Expense

 
Federal  $36,127   $202,966   $239,093 
State   6,393    35,933    42,326 
Total tax expense  $42,520    238,899   $281,419 

 

Income taxes paid, were $2,630 for the three months ended March 31, 2026. Such payments consisted of state income tax payments to Connecticut, Minnesota, New York and Pennsylvania.

 

Income taxes paid, were $6,230 for the three months ended March 31, 2025. Such payments consisted of state income tax payments to Minnesota, Massachusetts, Pennsylvania, Connecticut and New York.

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets as of March 31, 2026 and December 31, 2025 were as follows:

 

Deferred Tax Assets Summary  March 31, 2026   December 31, 2025 
Federal  $264,960   $520,464 
State   115,647    71,357 
Foreign (non-U.S.)   17,822    18,143 
Total  $398,429   $609,964 

 

Deferred Tax Assets Summary  March 31, 2026   December 31, 2025 
Operating lease right of use lease assets  $1,353   $1,574 
Inventories allowance   102,874    112,518 
Net loss carry forward   294,202    495,872 
Total  $398,429   $609,964 

 

The Company files income tax return in the U.S. federal jurisdiction and various state jurisdictions. Based on management’s evaluation, there is no provision necessary for material uncertain tax position for the Company as of March 31, 2026 and December 31, 2025.

 

For the three months ended March 31, 2026 and for the year ended December 31, 2025, the Company reported net operating income of $823,482 and $1,704,849, respectively. The net operating loss carryforward is not subject to any expiration period under federal regulations, while at the state level, the expiration period usually ranges up to 20 years, or there may be no expiration period at all.

 

 

HOUR LOOP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company expects to generate sufficient taxable income in future periods against which the deferred tax assets can be utilized. Accordingly, a valuation allowance may not be needed.