DeFi Development Corp.DFDV
DeFi Development Corp. Income Taxes Disclosure
NOTE 14—INCOME TAXES
The table below presents the components of our (loss) income from operations before income taxes:
| Year ended December 31 (in thousands) | 2025 | 2024 | ||||||
| United States | $ | (73,779) | $ | (2,727) | ||||
| Foreign | — | — | ||||||
| Total | $ | (73,779) | $ | (2,727) | ||||
Income tax (benefit) expense from operations consisted of the following:
| Year ended December 31 (in thousands) | 2025 | 2024 | ||||||
| Current: | ||||||||
| Federal | $ | — | $ | — | ||||
| State | 9 | — | ||||||
| Foreign | — | — | ||||||
| Total current tax (benefit) expense | $ | 9 | $ | — | ||||
| Deferred: | ||||||||
| Federal | $ | — | $ | — | ||||
| State | — | — | ||||||
| Foreign | — | — | ||||||
| Total deferred tax (benefit) expense | $ | — | $ | — | ||||
| Total income tax (benefit) expense | $ | 9 | $ | — | ||||
EFFECTIVE TAX RATE
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years after the adoption of ASU 2023-09 is as follows:
| Year ended December 31 (in thousands) | 2025 | |||||||
| Federal statutory income tax rate | $ | (15,494) | 21.00 | % | ||||
State income taxes, net of federal benefit(a) | 9 | (0.01) | ||||||
Changes in valuation allowance(b) | 15,894 | (21.54) | ||||||
| Nontaxable or nondeductible items | ||||||||
| Share based compensation | (1,352) | 1.83 | ||||||
| Transaction Costs | 1,093 | (1.48) | ||||||
| Other | 6 | (0.01) | ||||||
| Other Adjustments | (147) | 0.20 | ||||||
| Total | $ | 9 | (0.01) | % | ||||
(a)The states and local jurisdictions that contributes to the majority (greater than 50%) of the tax effect in this category is Texas.
(b)Represents changes in federal valuation allowance.
A reconciliation of the provision for income taxes to the amount computed by applying the 21.0% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
| Year ended December 31 | 2024 | ||||
| Federal statutory income tax rate | 21.0 | % | |||
| State income taxes, net of federal benefit | 4.4 | ||||
| Change in valuation allowance | (25.4) | ||||
| Provision for income taxes | — | % | |||
INCOME TAXES PAID (NET OF REFUNDS RECEIVED)
The following table presents supplemental cash flow information related to income taxes paid, net of any refunds received:
| Year ended December 31 (in thousands) | 2025 | ||||
| Federal | $ | — | |||
| State and local | |||||
| Georgia | 1 | ||||
| New Jersey | 1 | ||||
| Total income taxes paid (net of refunds) | $ | 2 | |||
DEFERRED INCOME TAXES
| December 31 (in thousands) | 2025 | 2024 | ||||||
| Deferred tax asset: | ||||||||
| Net operating loss carryforwards | $ | 1,541 | $ | 1,257 | ||||
| Cryptocurrency investments | 8,413 | — | ||||||
| Unrealized loss on derivative assets | 5,654 | — | ||||||
| Unrealized loss on digital assets | 1,524 | — | ||||||
| Other deferred tax assets | 2,819 | 414 | ||||||
| Gross deferred tax assets | 19,951 | 1,671 | ||||||
| Valuation allowance | (19,211) | (1,671) | ||||||
| Total deferred income tax asset | $ | 740 | $ | — | ||||
| Deferred tax liability: | ||||||||
| Depreciation and amortization | $ | (692) | $ | — | ||||
| Other deferred tax liabilities | (48) | — | ||||||
| Total deferred income tax liability | $ | (740) | $ | — | ||||
| Net deferred tax asset (liability) | $ | — | $ | — | ||||
DEFERRED TAX VALUATION ALLOWANCE
| December 31 (in thousands) | 2025 | 2024 | ||||||
| Balance January 1 | $ | 1,671 | $ | 625 | ||||
Additions(a) | 17,540 | 1,046 | ||||||
| Balance December 31 | $ | 19,211 | $ | 1,671 | ||||
UNRECOGNIZED TAX BENEFITS
| (in thousands) | 2025 | 2024 | ||||||
| Balance January 1 | $ | — | $ | — | ||||
| Additions | — | — | ||||||
| Settlements | — | — | ||||||
| Balance December 31 | $ | — | $ | — | ||||
In evaluating its ability to realize the net deferred tax assets, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required due to cumulative losses through December 31, 2025. Therefore, a valuation allowance of approximately $19.2 million and $1.7 million was recorded as of December 31, 2025 and 2024, respectively.
The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. At December 31, 2025, the Company had federal net operating loss carryforwards and state net operating loss carryforwards available to offset future taxable income in the amounts of approximately $6.4 million and $3.4 million, respectively. Federal net operating loss carryforwards can be carried forward indefinitely while the state net operating loss carryforwards begin to expire in 2042. At December 31, 2025, the Company had federal tax credit carryforwards of approximately $0.2 million that begin to expire in 2042. Certain changes in ownership can result in a limitation on the amount of net operating loss and tax credit carryovers that can be utilized each year. During the year ended December 31, 2025, the Company experienced a change in ownership and as such, the Company's net operating loss and tax credit carryforwards are subject to limitations under Section 382 and Section 383 of the Internal Revenue Code.
The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.
The Company is subject to taxation in the U.S. and various state jurisdictions. The Company is not presently subject to any income tax audit in any taxing jurisdiction, though all tax years from 2022 on remain open to examination.
TAX LEGISLATION
On July 4, 2025, the new U.S. tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. We are currently evaluating the impact of the new legislation but we do not expect it to have a material impact on the results of operations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 30, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Mar 28, 2024 | |
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.