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

Note 9:  Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. 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, as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

 

The components of income tax expense (benefit) for the years ended December 31 are as follows:

 

 

 

2025

 

 

2024

 

Current federal income tax expense

 

$—

 

 

$—

 

Current state income tax expense

 

 

—

 

 

 

—

 

Deferred federal income tax expense (benefit)

 

 

356,656

 

 

 

(132,479)

Deferred state income tax expense (benefit)

 

 

60,816

 

 

 

(24,879)

Total income tax expense (benefit)

 

$417,472

 

 

$(157,358)

 

Income before income taxes was approximately $1.59 million in 2025 and a loss before income taxes of approximately $161,000 in 2024.

 

The difference between income taxes computed using the U.S. federal statutory tax rate and the Company's effective income tax rate for the years ended December 31 is summarized as follows:

 

 

 

2025

 

 

2024

 

Federal statutory tax rate

 

 

21.0%

 

 

21.0%

State income taxes, net of federal benefit

 

 

2.4%

 

 

2.4%

Permanent differences

 

 

1.6%

 

 

(0.7)%

Effective tax rate

 

 

25.0%

 

 

22.7%

Deferred tax assets consist primarily of the following at December 31:

 

 

 

2025

 

 

2024

 

Federal and state net operating loss carryforwards

 

$3,114,727

 

 

$3,532,199

 

Total deferred tax assets

 

 

3,114,727

 

 

 

3,532,199

 

Valuation allowance

 

 

—

 

 

 

—

 

Net deferred tax asset

 

$3,114,727

 

 

$3,532,199

 

 

The Company had federal and state net operating loss carryforwards of approximately $13.4 million as of December 31, 2025. Certain federal net operating loss carryforwards may be carried forward indefinitely, subject to applicable limitations under the Internal Revenue Code.

 

Management evaluates the realizability of deferred tax assets on a periodic basis. In assessing the need for a valuation allowance, management considers all available positive and negative evidence, including historical operating results, projected future taxable income, reversal of existing temporary differences, and tax planning strategies.

 

Based on management's assessment of the Company's historical operating performance, recent profitability, projected future taxable income, and expected utilization of available net operating loss carryforwards, management concluded that it is more likely than not that the deferred tax assets will be realized. Accordingly, no valuation allowance was recorded as of December 31, 2025 or 2024.

 

The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. Tax years 2022 through 2025 remain subject to examination by the applicable taxing authorities.

 

The Company recognizes the financial statement effects of uncertain tax positions when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority. As of December 31, 2025 and 2024, management concluded that no material uncertain tax positions existed requiring recognition or disclosure in the accompanying consolidated financial statements.

 

The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense. No material interest or penalties were recognized during 2025 or 2024.