Ainos, Inc. Income Taxes Disclosure

10. Income Taxes

 

The components of the provision (benefit) for income taxes consist of the following:

 Schedule of Income Tax Expense Benefit

		2025				2024
		For the Year Ended December 31,
		2025				2024
Current federal taxes		$	-			$	-
Current state taxes			800				800
Current tax provision			800				800
Deferred tax provision			4,522,000				129,000
Change in valuation allowance			(4,522,000	)			(129,000	)
Total income tax expense provision		$	800			$	800

 

A reconciliation of the statutory tax rates to the effective tax rates applicable to the Company is as follows:

 Schedule of Reconciliation of Statutory Tax Rate to the Effective Tax Rate

		2025				2024
		For the Year Ended December 31,
		2025				2024
Statutory federal income tax rate			21	%			21	%
Permanent differences			(2	)%			(1	)%
Deferred adjustment			(4	)%			(4	)%
State income tax expense			0	%			0	%
Change in valuation allowance			(15	)%			(16	)%
Effective income tax rate			0	%			0	%

 

The components of the Company’s deferred tax assets and liabilities are as follows:

 Schedule of Deferred Tax Assets and :Liabilities

		2025				2024
		December 31,
		2025				2024
Deferred tax assets (liabilities)
Net operating loss carry forwards		$	11,028,000			$	6,911,000
Amortization			1,825,000				1,426,000
Depreciation			14,000				23,000
Capitalized research and development			635,000				611,000
Share-based compensation			113,000				119,000
Other temporary differences			51,000				54,000
Total deferred tax assets			13,666,000				9,144,000
Depreciation			-				-
Total deferred tax liabilities			-				-
Less: Valuation allowance			(13,666,000	)			(9,144,000	)
Net deferred tax assets		$	-			$	-

 

The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The Company has a valuation allowance against the full amount of its net deferred tax assets due to the operating loss history of the Company. The effect of a change in tax rates or laws on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date of the rate change.

 

 

As of December 31, 2025, the Company had U.S. federal net operating loss carryforwards of approximately $52,516,177. The federal net operating loss carryforwards generated through December 31, 2017 of $11,549,477 will expire in 2026 through 2037, while $40,966,700 of federal net operating loss carryforwards generated in post December 31, 2017 or later do not expire due to the provisions in the Tax Cuts and Jobs Act but may only offset 80% of taxable income in periods of future utilization. The state net operating loss carryovers has been immaterial.

 

The Company files returns with the U.S. federal government and various state jurisdictions. The Company’s returns have been, and could be in the future, subject to examination which may, or may not, have an impact to the financial statements.