Datacentrex, Inc. Income Taxes Disclosure

Note 13 – Income Taxes

 

Effective July 25, 2025, the Company converted from a limited liability company (LLC) to a C Corporation as a result of the asset purchase agreement between the Company and US Data and Energy, LLC . Prior to the conversion, the Company was treated as a pass-through entity for federal and state income tax purposes, and accordingly, no provision for income taxes was recorded at the entity level for the period from January 1, 2025 through June 30, 2025. Income during this period was taxable directly to the members.

 

Following the conversion, the Company became subject to federal and applicable state corporate income taxes. As a result, the Company has recorded a provision for income taxes for the period from June 30, 2025 through December 31., 2025 in accordance with ASC 740, Income Taxes. The provision includes both current and deferred income tax expense.

 

Deferred tax assets and liabilities were established as of the conversion date based on temporary differences between the book and tax bases of assets and liabilities. The Company also evaluated the realizability of its deferred tax assets and recorded a valuation allowance where it was determined that it is more likely than not that certain deferred tax assets will not be realized.

 

 

As of December 31, 2025, the Company has approximately $737,000 in gross deferred tax assets resulting from net operating loss carry-forwards of $3,509,000, available to offset future taxable income through 2041 subject to the change in ownership provisions under IRC 382. A valuation allowance has been recorded to fully offset these deferred tax assets because the Company’s management believes future realization of the related tax benefits is uncertain.