Dakota Gold Corp. Income Taxes Disclosure
NOTE 6 - Income Taxes
A summary of the reconciliation of the income tax benefit based on the statutory federal income tax rate of 21% to the income tax expense (benefit) reported in these financial statements for the years ended December 31, 2025 and 2024 is as follows:
Years Ended December 31, | ||||
2025 | 2024 | |||
| $ | | $ | |
Income tax benefit computed at federal statutory rates | (6,214,995) |
| (7,117,398) | |
Non-deductible expenses | 2,935 |
| 5,452 | |
Non-deductible stock-based compensation | (38,800) |
| 472,590 | |
Change in valuation allowance | 6,260,538 |
| 6,609,916 | |
Other | (72,677) |
| 21,605 | |
Total income tax expense (benefit) | (62,999) |
| (7,835) | |
The effective tax rates for the year ended December 31, 2025 was 0.21% (December 31, 2024 - 0.02%). The effective tax rates for the years ended December 31, 2025 and 2024 were less than the statutory rate as the Company is in a tax loss position and does not expect to realize those losses in the near future.
There are no unrecognized tax benefits as of December 31, 2025 and 2024. We file income tax returns in the United States federally and in Canada. The Company has not been subjected to tax examinations for any year. As of December 31, 2025, tax years 2022 through 2025 are open to examination by the tax authorities in the U.S.
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets or liabilities.
Significant components of our deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:
December 31, | December 31, | |||
2025 | 2024 | |||
| $ | | $ | |
Deferred tax assets: | ||||
Net operating losses | 11,833,222 | 10,066,561 | ||
Stock-based compensation | 2,738,162 | 2,873,832 | ||
Property and equipment | 44,064 | 33,476 | ||
Mineral properties | 8,474,618 | 3,859,034 | ||
Other | 36,609 | 33,234 | ||
Total | 23,126,675 | 16,866,137 | ||
Less: valuation allowance | (23,126,675) | (16,866,137) | ||
Total deferred tax assets | — | — |
NOTE 6 - Income Taxes (continued)
The Company maintains gross federal net operating loss (“NOL”) carry forwards of approximately $56.2 million ($11.8 million tax-effected) as of December 31, 2025. Of the total gross amount, approximately $8.4 million ($1.8 million tax-effected) will begin to expire in 2027, as they were incurred prior to 2018. The NOLs generated in 2018 - 2025 can be carried forward indefinitely under the provisions of the Tax Cuts and Jobs Act. There are no unrecognized tax benefits as of December 31, 2025 and 2024. We file income tax returns in the United States federally and in one state jurisdiction and in Canada. The Company has not been subjected to tax examinations for any year. As of December 31, 2025, tax years 2022 through 2025 are open to examination by the tax authorities in the U.S.
Management has established a valuation allowance against any portion of deferred tax assets because it is more likely than not the deferred income tax asset will not be realized.
Balance at | Charged to |
| ||||
Beginning of | Costs and | Balance at End | ||||
Fiscal Year | Expense | of Fiscal Year | ||||
| $ | | $ | | $ | |
Reserves and allowances deducted from asset accounts: | |
| |
| | |
Valuation allowance for deferred tax assets | |
| |
| | |
Year ended December 31, 2025 | 16,866,137 |
| 6,260,538 | (1) | 23,126,675 | |
Year ended December 31, 2024 | 10,256,221 |
| 6,609,916 | (1) | 16,866,137 |
| (1) | Primarily associated with net operating losses generated and current year changes in U.S. federal temporary differences |
A summary of the tax payments and benefits during the year ended December 31, 2025, is as follows:
| Payment | ||
(benifit) | |||
Jurisdiction | amount | ||
| $ | ||
| (62,999) | ||
United states |
| — | |
Net payment (refund) |
| (62,999) | |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 25, 2026 | Showing above |
| 2024 | Mar 20, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Jun 28, 2022 | |
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.