v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Taxes  
Income Taxes

Note 8. Income Taxes

 

The Company had nil and $38,360 income tax provision for the six months ended June 30, 2026 and 2025.

 

 

 

For the six months ended June 30,

 

 

 

2026

 

 

2025

 

Deferred income tax expense

 

$-

 

 

$38,360

 

Current income tax expense

 

 

-

 

 

 

-

 

Total

 

$-

 

 

$38,360

 

 

The Company has the following deferred tax assets (liabilities) as of June 30, 2026 and December 31 2025:

 

 

 

As of June 30, 2026

 

 

As of December 31, 2025

 

Net operating loss carryforwards

 

$2,179,855

 

 

$1,768,511

 

Change in fair value of crypto assets

 

 

1,592

 

 

 

328,686

 

Change in fair value of convertible debt

 

 

14,157

 

 

 

169,618

 

Impairment loss on intangible assets

 

 

306,748

 

 

 

306,748

 

Other expense temporary difference

 

 

2,813

 

 

 

2,813

 

Total deferred tax assets

 

 

2,505,165

 

 

 

2,576,376

 

Deferred tax liability- Depreciation

 

 

(2,263 )

 

 

(2,263 )

Allowance

 

 

(2,502,902 )

 

 

(2,574,113 )

Net deferred tax liability

 

$-

 

 

$-

 

 

The Company evaluated the recoverable amounts of deferred tax assets, and provided a valuation allowance to the extent that future taxable profits will not be available against which the net operating loss and temporary differences can be utilized. A valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. The Company has provided a valuation allowance for the net deferred tax asset as it is not more likely than not that the asset will be realized.

 

The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the periods ended June 30, 2026 and 2025:

 

 

 

June 30, 2026

 

 

June 30, 2025

 

Federal statutory rate

 

 

21.0%

 

 

21.0%

Deferred tax adjustment related to convertible debt convesion

 

 

(5.3)%

 

 

 

 

Deferred tax adjustment related to Crypto asset exchange

 

 

(15.5)%

 

 

 

 

Nondeductible expense

 

 

(0.4)%

 

 

-

 

Valuation allowance

 

 

(0.1)%

 

 

(21.9 )

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

 

0.0%

 

 

0.9%

 

The effective tax rate for the six months ended June 30, 2026 and 2025 is less than the statutory rate primarily as a result of the valuation allowance for net deferred tax assets.

 

No uncertain tax benefits have been recorded for the three and six months ended June 30, 2026 and 2025.

 

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” (the “Act”) was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company analyzed the provisions of the Act and determined there was no significant impact to its income taxes for the periods presented.

 

As of June 30, 2026, Classover NJ and Classover Holdings, Inc. has approximately $9,340,060 and $1,040,203 in federal net operating loss carryforwards, respectively. These loss carryforwards have an indefinite life.

 

The Company’s tax years 2023 and forward generally remain subject to examination by federal and state tax authorities.