INCOME TAXES |
6 Months Ended |
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Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | NOTE 13 – INCOME TAXES
The Company is required to calculate its interim income tax provision using the estimated annual effective tax rate (“AETR”) method which involves the use of forecasted information, adjusted for the effect of discrete items arising in that quarter. Under the AETR method, the income tax provision is calculated by applying the estimated AETR for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding discrete items) for the reporting period. This could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings or losses versus forecasted earnings for the full fiscal year. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, a cumulative adjustment is made in that quarter.
The Company recognized an income tax benefit of $133,629 and an income tax expense $13,868,598 for the three months ended June 30, 2026 and 2025, respectively. The Company recognized an income tax benefit of $26,805 and an income tax expense of $12,397,768 for the six months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, the Company’s effective tax rate was 3.7% and (200.1)%, respectively. For the six months ended June 30, 2026, the Company’s effective tax rate differed from the federal statutory rate of 21% primarily due to the permanent differences, state taxes, and change in valuation allowance. For the six months ended June 30, 2025, the Company’s effective tax rate differed from the federal statutory rate of 21% primarily due to permanent differences, state taxes, global intangible low-taxed income related to the Company’s foreign subsidiary, and the ratio of forecasted permanent book-tax differences compared to forecasted pre-tax income used in the AETR method is higher than it is expected to be at year-end, elevating the interim effective tax-rate.
The Company reassessed the realizability of its net deferred tax assets as of June 30, 2026. After considering all available positive and negative evidence, including cumulative losses in recent periods and updated projections of future taxable income, the Company concluded that it remains more likely than not that its net deferred tax assets will not be realized. Accordingly, a full valuation allowance recorded continues to be maintained.
Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements
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