AETHLON MEDICAL INC Income Taxes Disclosure

7. INCOME TAXES

 

For the years ended March 31, 2025 and 2024, we had no income tax expense due to our net operating losses and 100% deferred tax asset valuation allowance.

 

At March 31, 2025 and 2024, we had net deferred tax assets as detailed below. These deferred tax assets are primarily composed of capitalized research and development costs and tax net operating loss carryforwards. Due to uncertainties surrounding our ability to generate future taxable income to realize these assets, a 100% valuation allowance has been established to offset the net deferred tax assets.

 

 

Significant components of our net deferred tax assets at March 31, 2025 and 2024 are shown below:

Schedule of deferred tax assets
		YEAR ENDED MARCH 31,
		2025				2024
Deferred tax assets:
Research and development credit carryforwards		$	3,442,000			$	3,442,000
Capitalized research and development costs			519,000				646,000
Net operating loss carryforwards(1)			30,022,000				26,927,000
Stock compensation			415,000				2,244,000
Total deferred tax assets			34,398,000				33,259,000
Total deferred tax liabilities			–				–
Net deferred tax assets			34,398,000				33,259,000
Valuation allowance for deferred tax assets			(34,398,000	)			(33,259,000	)
Net deferred tax assets		$	–			$	–

 ______________

(1)

Pursuant to Internal Revenue Code Section 382, use of our tax net operating loss carryforwards may be limited. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to an ownership change. Subsequent ownership changes may further affect the limitation in future years. If and when the Company utilizes the NOL carryforwards in a future period, it will perform an analysis to determine the effect, if any, of these loss limitation rules on the NOL carryforward balances.

 

At March 31, 2025, we had tax net operating loss carryforwards for federal and state purposes approximating $97 million and $91 million, respectively, portions of which began to expire in the year 2021. The indefinite position is approximately $36 million. Research and Development credits begin to expire in 2025.

   

The provision for income taxes on earnings subject to income taxes differs from the statutory federal rate for the years ended March 31, 2025 and 2024 due to the following:

Schedule of provision for income taxes
		2025				2024
Income taxes (benefit) at federal statutory rate of 21.00%		$	(2,811,000	)		$	(2,564,000	)
Tax effect on non-deductible expenses and credits			1,000				2,000
True up items			132,000				(29,000	)
Expiration of net operating loss carryforwards (1)			204,000				204,000
Change in valuation allowance			2,474,000				2,387,000
Income Tax Expense (Benefit)		$	–			$	–

 ______________

(1)	Pursuant to Internal Revenue Code Section 382, use of our tax net operating loss carryforwards may be limited.

 

ASC 740, “Income Taxes”, clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements, and prescribes recognition thresholds and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. During the years ended March 31, 2025 and 2024, we did not recognize any interest or penalties relating to tax matters.

  

At and for the years ended March 31, 2025 and 2024, management does not believe the Company has any uncertain tax positions. Accordingly, there are no unrecognized tax benefits at March 31, 2025 or March 31, 2024.

 

Our tax returns remain open for examination by the applicable authorities, generally 3 years for federal and 4 years for state. We are currently not under examination by any taxing authorities.