Brand Engagement Network Inc. Income Taxes Disclosure

NOTE K - INCOME TAX

 

Because of the Company’s continued losses, the company did not record a tax provisions for the years ended December 31, 2025 and 2024. The components of our deferred tax assets are as follows:

 SCHEDULE OF INCOME TAX PROVISIONS

		2025				2024
		December 31,
		2025				2024
Deferred Tax Assets:
Intangible assets		$	1,020,000			$	1,020,000
Section 174			70,000				70,000
Accrued expenses			860,000				860,000
Federal net operating losses			6,205,786				4,450,000
Research and development credit			18,971				40,000
Total deferred tax assets			8,174,757				6,440,000
Less: Valuation allowance			(8,061,732	)			(6,320,000	)
Net Deferred Tax Assets:		$	113,025			$	120,000
Deferred Tax Liabilities:
Fixed assets		$	(113,025	)		$	(120,000	)
Net Deferred Tax Liability		$	-			$	-

 

A reconciliation of the statutory income tax rate to the effective tax rate is as follows:

 SCHEDULE OF RECONCILIATION OF THE STATUTORY INCOME TAX RATE

		2024				2023
		December 31,
		2025				2024
Federal rate		$	(1,811,341	)		$	(7,080,000	)
Stock compensation			107,931				289,000
Impairment loss			-				2,830,000
Change in fair value of warrant liability			(41,431	)			(209,000	)
Federal RTP			-				(25,000	)
Deferred tax adjustment			-				(347,000	)
Other			3,110				102,000
Change in valuation allowance			1,741,731				4,440,000
Income Tax Provision (Benefit)			-				-

 

As of the Company’s last filed Federal returns on December 31, 2025 and 2024, the Company has net operating losses of $6,205,786 and $4,974,489, respectively, available for carryforward to future years. These operating losses are indefinite lived, however their deductibility is limited under Internal Revenue Code 720.

 

As of December 31, 2025, the Company has a valuation allowance of $8,061,732 against all net domestic deferred tax assets, for which realization cannot be considered more likely than not at this time. The net change in the valuation allowance was $1,741,731 for the year ended December 31, 2025. Management assesses the need for the valuation allowance on an annual basis. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and past financial performance.

 

Wyoming has no corporate income tax.

 

The Company does not expect any material changes in the amount of unrecognized tax benefits within the next twelve months. The Company files tax returns as prescribed by the laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The statute of limitations period is generally three years. Due to the extent of the net operating loss carryforward, however, all tax years remain open to examination.