Alset Inc. Income Taxes Disclosure

12. INCOME TAXES

 

US Income Taxes

 

The components of income tax expense and the effective tax rates for the years ended December 31, 2025 and 2024 are as follows:

 SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

		2025				2024
		Year Ended December 31,
		2025				2024
Current:
Federal		$	423,117			$	150,786
State			-				-
Foreign			8,969				-
Total Current			432,086				150,786
Deferred:
Federal			1,629,517				(1,821,412	)
State			1,102,091				(342,691	)
Total Deferred			2,731,608				(2,164,103	)
Valuation Allowance			(2,731,608	)			2,164,103
Total Income Tax Expense		$	432,086			$	150,786
Pre-tax Loss		$	(48,918,480	)		$	(4,015,030	)
Effective Income Tax Rate			-0.9	%			-3.8	%

 

 

A reconciliation of our income tax expense at federal statutory income tax rate of 21% to our income tax expense at the effective tax rate is as follows:

 SCHEDULE OF RECONCILIATION OF INCOME TAX

		2025				2024
		Year Ended December 31,
		2025				2024
Federal Statutory Tax Rate			21.0	%			21.0	%
Capitalized Construction Costs			0.0	%			3.0	%
Deferred Finance Costs			0.0	%			-0.6	%
Miscellaneous Permanent Items			-0.3	%			-1.4	%
Non-Includible Foreign Entities Loss/(Income)			-15.1	%			-27.4	%
Valuation Allowance			-6.5	%			1.6	%
Effective Income Tax Rate			-0.9	%			-3.8	%

 

Deferred tax assets consist of the following at December 31, 2025 and 2024:

 SCHEDULE OF DEFERRED TAX ASSETS

		2025				2024
Deferred Tax Assets:
Accrued Interest Expense		$	7,270,359			$	6,560,893
Accrued Expense			820,897				600,224
Accrued Other Income			3,793,383				1,596,154
Partnership Gain			13,175				13,175
Real Estate Impairment			114,433				114,432
Other Amortization			1,201,433				1,160,710
Unrealized Loss on Investment			11,641,988				10,351,184
Others			343,976				887,084
Net Operating Loss			3,400,924				1,096,627
Total Deferred Tax Assets:		$	28,600,568			$	22,380,483
Deferred Tax Liabilities:
Accrued Interest Income			(8,733,848	)			(7,813,704	)
Accumulated Depreciation and Amortization			(485,804	)			(204,061	)
Capitalized Costs			(3,102,417	)			(2,185,216
Total Deferred Tax Assets:		$	(12,322,069	)		$	(10,202,981	)
Deferred Tax Assets, Net			16,278,500				12,177,502
Less Valuation Allowance			(16,278,500	)			(12,177,502	)
Deferred Tax Asset c/f		$	-			$	-

 

As of December 31, 2025 and 2024, the Company has Federal and State net operating loss carry-forwards of approximately $26.1 million and $14.8 million, respectively. Of these amounts, approximately $15.0 million begin to expire in 2031, while approximately $11.1 million do not expire and may be carried forward indefinitely. The full utilization of the deferred tax assets in the future is dependent upon the Company’s ability to generate taxable income. Accordingly, a valuation allowance of an equal amount has been established. During the year ended December 31, 2025, the valuation allowance increased by approximately $4.1 million.

 

As of December 31, 2025, total tax payable is $371,845, including federal income tax payable of $371,845, and Maryland state income tax payable of $0. As of December 31, 2024, total tax payable is $115,335, including federal income tax payable of $147,558, and Maryland state income tax receivable of $32,223.

  

 

We are subject to U.S. federal income tax as well as income tax of certain state jurisdictions. We have substantially concluded all U.S. federal income tax and state tax matters through 2020. However, our federal tax returns for the years 2022 through 2024 remain open to examination. State tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Consolidated Financial Statements.

 

Income taxes – Other Countries

 

On December 31, 2025 and 2024, foreign subsidiaries have tax losses of approximately $2.0 million and $1.4 million, respectively, which are available for offset against future taxable profits, subject to the agreement of the tax authorities and compliance with the relevant provisions. The deferred tax assets arising from these tax losses have not been recognized because it is not probable that future taxable profits will be available to use these tax assets. The following charts show the details in different regions as of December 31, 2025 and 2024.

 

As of December 31, 2025:

 SCHEDULE OF OTHER COUNTRY INCOME TAXES

		SG Companies				HK Companies				KR Companies				AU Companies				PRC Companies				TW Companies				MYS Companies				Total
Calculation:
Cumulative loss and other deferred tax assets before tax		$	(5,318,336	)		$	(3,566,206	)		$	(336,028	)		$	-			$	(760,852	)		$	(1,071,376	)		$	(8,065	)		$	(11,044,733	)
Effective tax rates			17.00	%			16.50	%			25.00	%			30.00	%			25.00	%			25.00	%			17.00	%			-
Tax at the domestic tax rates applicable to profits in the countries where the Company operates		$	(904,117	)		$	(588,424	)		$	(84,007	)		$	-			$	(190,213	)		$	(267,844	)		$	1,371			$	(2,033,234	)
Adjustments:
Deferred tax assets not recognized		$	904,117			$	588,424			$	84,007			$	-			$	190,213			$	267,844			$	(1,371	)		$	2,033,234
Income tax expenses recognized in profit or loss		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-

 

As of December 31, 2024:

 

		SG Companies				HK Companies				KR Companies				AU Companies				PRC Companies				TW Companies				MYS Companies				Total
Calculation:
Cumulative loss and other deferred tax assets before tax		$	(3,507,971	)		$	(2,227,364	)		$	(1,257,412	)		$	-			$	(446,024	)		$	(208,516	)		$	(3,947	)		$	7,651,234	)
Effective tax rates			17.00	%			16.50	%			25.00	%			30.00	%			25.00	%			25.00	%			17.00	%			-
Tax at the domestic tax rates applicable to profits in the countries where the Company operates		$	(596,355	)		$	(367,515	)		$	(314,353	)		$	-			$	(111,506	)		$	(52,129	)		$	(671	)		$	(1,442,529	)
Adjustments:
Deferred tax assets not recognized		$	596,355			$	367,515			$	314,353			$	-			$	111,506			$	52,129			$	671			$	1,442,529
Income tax expenses recognized in profit or loss		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-