BranchOut Food Inc. Income Taxes Disclosure

Note 20 - Income Taxes

 

The Company incurred net operating losses for the years ended December 31, 2025 and 2024. Accordingly, no provision for income taxes has been recorded. In addition, no income tax benefit has been recognized due to the uncertainty of the realization of deferred tax assets.

 

Effective Tax Rate Reconciliation

 

The provision (benefit) for income taxes differs from the amount computed by applying the U.S. federal statutory income tax rate to the Company’s loss before income taxes for the years ended December 31, 2025 and December 31, 2024 are as follows:

 Schedule of Reconciliation of Effective Income Tax Rate

		2025				2024
U.S. federal statutory rate			21.0	%			21.0	%
Change in valuation allowance			(21.0	)%			(21.0	)%
Effective tax rate			0.0	%			0.0	%

 

Deferred Tax Assets

 

The components of the Company’s deferred tax asset are as follows:

Schedule of Net Deferred Tax Assets

		December 31,				December 31,
		2025				2024
Deferred tax assets:
Net operating loss carryforwards		$	2,703,836			$	1,997,520
Net deferred tax assets before valuation allowance		$	2,703,836			$	1,997,520
Less: Valuation allowance			(2,703,836	)			(1,997,520	)
Net deferred tax assets		$	-			$	-

 

 

The Company has incurred cumulative losses since inception which makes realization of its deferred tax assets uncertain. Based on the available objective evidence, including the Company’s history of operating losses, management believes it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024.

 

Net Operating Loss Carryforwards

 

At December 31, 2025, the Company had approximately $12.9 million of federal net operating loss carryforwards available to offset future taxable income. Federal net operating losses generated after December 31, 2017 may be carried forward indefinitely; however, the utilization of such losses is limited to 80% of taxable income in any given year.

 

Utilization of the Company’s net operating loss carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code due to changes in ownership.

 

Income Taxes Paid

 

Income taxes paid (net of refunds) were as follows:

 Schedule of Income Tax Paid

			2025				2024
Federal		$	-			$	-
State			-				-
Foreign			-				-
Total		$	-			$	-

 

The Company did not incur or pay income taxes during the years ended December 31, 2025 and 2024 due to operating losses.

 

Foreign Taxes

 

The Company’s foreign subsidiary is subject to income taxation in Peru. Deferred tax assets related to the foreign jurisdiction have not been recognized due to cumulative losses and the Company’s overall valuation allowance position.

 

Uncertain Tax Positions

 

In accordance with ASC 740, the Company evaluates uncertain tax positions using a two-step recognition and measurement process. The Company has evaluated its tax positions and determined that there are no uncertain tax positions as of December 31, 2025 and 2024.