CNS Pharmaceuticals, Inc. Income Taxes Disclosure

Note 6 – Income Taxes

 

The Company is subject to United States federal income taxes at an approximate rate of 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

Schedule of effective income tax rate reconciliation
		Year Ended				Year Ended
		December 31,				December 31,
		2025				2024
Income tax benefit computed at the statutory rate		$	3,329,000			$	3,120,000
Tax effect of:
True-ups and non-deductible expenses			193,000				(585,000	)
Change in valuation allowance			(3,522,000	)			(2,535,000	)
Provision for income taxes		$	–			$	–

 

The Company adopted ASC 2023-09 during the year ended December 31, 2025 prospectively. A reconciliation setting forth the differences between the effective tax rates and the U.S. federal statutory tax rate is as follows:

		Year Ended December 31, 2025
		Amount				Rate
US federal statutory tax rate		$	3,329,000				21.0%
Changes in valuation allowances			(3,522,000	)			-22.2%
Nontaxable or nondeductible items			193,000				1.2%
Effective income tax rate		$	–				0%

 

 

Significant components of the Company’s deferred tax assets and liabilities after applying enacted corporate income tax rates are as follows:

Schedule of deferred tax assets
		As of				As of
		December 31,				December 31,
		2025				2024
Deferred income tax assets
Net operating losses		$	10,633,000			$	7,923,000
Stock-based compensation			1,026,000				999,000
Capitalized 174 expenses			7,443,000				6,659,000
Deferred income tax liability
Prepaid expenses			(278,000	)			(279,000	)
Valuation allowance			(18,824,000	)			(15,302,000	)
Net deferred income tax assets		$	–			$	–

 

As of December 31, 2025, the Company currently has net operating loss carryforwards of approximately $50,634,000. Approximately $200,000 of the net operating loss carryforward will begin to expire in 2037. The remaining net operating loss carryforward post-2017 may be carried forward indefinitely.

 

The Tax Reform Act of 1986 limits the use of net operating loss carryforwards in certain situations where changes occur in the stock ownership of a company. In the event that the Company has a change in ownership, utilization of carryforwards could be limited.