Angel Studios, Inc. Income Taxes Disclosure
16. | Income Taxes |
The components of the provision (benefit) for income taxes, net are as follows for the years ended December 31:
| 2025 | 2024 | | 2023 | |||||
U.S. Federal: | |||||||||
Current | $ | — | $ | (251,837) | $ | 1,098,349 | |||
Deferred |
| — | 3,219,201 | (3,219,201) | |||||
Total |
| — | 2,967,364 | (2,120,852) | |||||
U.S. State: | |||||||||
Current | — | (213,880) | 204,535 | ||||||
Deferred | — | 781,118 | (781,118) | ||||||
Total | — | 567,238 | (576,583) | ||||||
Provision (benefit) for income taxes, net | $ | — | $ | 3,534,602 | $ | (2,697,435) | |||
The following table presents the differences between the Company's income tax provision and the amounts computed at the federal statutory income tax rate, on both a dollar and percentage basis, for the years ended December 31:
| 2025 | 2024 | | 2023 | ||||||||||||||
Federal income tax at statutory rates | $ | (35,778,212) | (21.00) | % | $ | (17,831,284) | (21.00) | % | $ | 2,208,285 | 21.00 | % | ||||||
| (5,438,581) | (3.19) |
| (2,952,104) | (3.48) |
| (77,872) | (0.74) | ||||||||||
Foreign tax effects | — | — | — | — | — | — | ||||||||||||
Effect of changes in tax laws or rates enacted in the current period | — | — | — | — | — | — | ||||||||||||
Effect of cross-border tax laws | — | — | — | — | — | — | ||||||||||||
Tax Credits | — | |||||||||||||||||
Research and development tax credits | (463,368) | (0.27) | (789,620) | (0.93) | (541,837) | (5.15) | ||||||||||||
other credits | — | — | — | — | — | — | ||||||||||||
Change in valuation allowance |
| 36,408,877 | 21.36 |
| 25,861,296 | 30.46 |
| (2,348,227) | (22.33) | |||||||||
Nontaxable or nondeductible items | — | |||||||||||||||||
Share-based payment awards | 726,433 | 0.43 | 179,732 | 0.21 | (192,026) | (1.83) | ||||||||||||
Transaction Costs | 1,114,854 | 0.65 | — | — | — | — | ||||||||||||
Changes in unrecognized tax benefits | — | — | — | — | — | — | ||||||||||||
Adoption of ASU 2025-06 | 3,130,425 | 1.84 | (343,482) | (0.40) | (1,033,267) | (9.83) | ||||||||||||
Other adjustments |
| 299,572 | 0.18 |
| (589,936) | (0.69) |
| (712,491) | (6.78) | |||||||||
$ | % | $ | 3,534,602 | 4.17 | % | $ | (2,697,435) | (25.66) | % | |||||||||
(1) The State of Utah contributes to the majority (greater than 50%) of the tax effect in this category.
Significant components of the Company’s net deferred income tax assets, which are included in other long-term assets on the consolidated balance sheets, are as follows as of December 31:
| 2025 | 2024 | | 2023 | |||||
Net operating loss carryforwards | $ | 56,183,299 | $ | 18,872,026 | $ | — | |||
Research and development |
| 1,568,124 |
| 5,564,482 |
| 3,787,461 | |||
Digital asset impairment |
| 1,929,027 |
| 1,491,329 |
| 1,920,228 | |||
Research and development credits |
| 603,571 |
| 1,180,635 |
| 229,867 | |||
Depreciation and amortization |
| 316,891 |
| (190,587) |
| (330,698) | |||
Impairment of equity investment | 243,795 | 243,557 | — | ||||||
Accruals and reserves |
| 2,356,927 |
| (310,990) |
| (554,006) | |||
Deferred gain on sale |
| (931,462) |
| (989,156) |
| (1,052,533) | |||
Valuation allowance |
| (62,270,172) |
| (25,861,296) |
| — | |||
$ | — | $ | — | $ | 4,000,319 | ||||
As of December 31, 2025, the Company had net operating loss (“NOL”) carryforwards available to offset future taxable income, of approximately $230.2 million. The utilization of the NOL carryforwards is subject to annual limitations under Section 382 of the Internal Revenue Code of 1986, as amended. Section 382 imposes limitations on a corporation’s ability to utilize its NOL carryforwards if it experiences an “ownership change.” In general terms, an ownership change results from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50.0% over a three-year period.
The total cash paid for income taxes (net of refunds) is composed of the following, for the years ended December 31:
| 2025 | 2024 | | 2023 | |||||
U.S. federal | $ | (312,019) | $ | 985,085 | $ | 1,500 | |||
State* |
| 18,962 |
| 16,355 | 20,708 | ||||
Total cash paid for income taxes (net of refunds) | $ | (293,057) | $ | 1,001,440 | $ | 22,208 | |||
*Some jurisdictions met the 5% disaggregation threshold; however, the related amounts were immaterial.
The Company has concluded that there are no significant uncertain tax positions requiring disclosure.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Apr 15, 2025 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.