AmpliTech Group, Inc. Income Taxes Disclosure

(13) Income Taxes

 

As of December 31, 2025 and 2024, the Company had net operating loss carry forwards of $25.0 million and $11.6 million, respectively, that may be available to reduce future years’ taxable income indefinitely. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur. Accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. For the years ending December 31, 2025 and 2024, the Company reflects a deferred tax liability in the amount of $52,000 and $39,000 respectively, due to the future tax liability from an asset with an indefinite life known as a “naked credit.” The future tax liability from this indefinite lived asset can be offset by up to 80% of net operating loss carryforwards created after 2017. The remaining portion of the future tax liability from indefinite lived assets cannot be used to offset definite lived deferred tax assets.

 

The components for the provision of income taxes include the following:

 Schedule of Components for the Provision of Income Taxes

		December 31, 2025				December 31, 2024
Current federal and state		$	–			$	–
Deferred federal and state			13,000				15,000
Total provision for income taxes		$	13,000			$	15,000

 

A reconciliation of the statutory US federal income tax rate to the Company’s effective income tax rate is as follows:

 Schedule of Effective Income Tax Rate

		Amount				%				Amount				%
		December 31, 2025								December 31, 2024
		Amount				%				Amount				%
Federal tax		$	(1,464,000	)			21.0	%		$	(2,357,000	)			21.0	%
State tax			(56,000	)			0.8	%			(92,000	)			0.8	%
Permanent items			5,000				(0.1	)%			6,000				(0.1	)%
Valuation allowance			1,528,000				(21.9	)%			2,458,000				(21.9	)%
Effective income tax rate		$	13,000				(0.2	)%			15,000				(0.2	)%

 

 

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

 

Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes. The Company has a net cumulative deferred tax liability of $52,000. The major components of deferred tax assets and liabilities are as follows:

 Schedule of Components of Deferred Tax Assets and Liabilities

		December 31, 2025				December 31, 2024
Deferred tax assets
Inventory obsolescence		$	266,000			$	232,000
ROU assets			6,000				40,000
Stock-based compensation			346,000				227,000
Research and development			–				588,000
Loss carryforward			5,450,000				3,474,000
Valuation allowance			(5,790,000	)			(4,315,000	)
Total deferred tax assets		$	278,000			$	246,000
Deferred tax liabilities
Fixed assets		$	(70,000	)		$	(120,000	)
Cost method investment			(29,000	)			(29,000	)
Intangible assets			(231,000	)			(136,000	)
Total deferred tax liabilities		$	(330,000	)		$	(285,000	)
Total net deferred income tax liabilities		$	(52,000	)		$	(39,000	)