Elite Express Holding Inc. Income Taxes Disclosure
NOTE 10 — INCOME TAXES
The Company and its operating subsidiary in the United States are subject to the tax law of the United States. The Company elected to file income taxes as a corporation for the tax year ended November 30, 2024.
(i)The components of the income tax provision were as follows:
| Successor | | | Successor | | Predecessor | ||||
For the | For the | |||||||||
For the year | Period from | Period from | ||||||||
Ended | October 26, 2024 to | December 1, 2023 to | ||||||||
November 30, | November 30, | October 25, | ||||||||
2025 | 2024 | 2024 | ||||||||
Current tax provision |
| |
|
| |
| | |||
Federal | $ | — | $ | — | $ | — | ||||
State |
| 1,600 |
| 800 |
| 800 | ||||
| 1,600 |
| 800 |
| 800 | |||||
Deferred tax benefit |
|
|
|
| ||||||
Federal |
| (72,992) |
| (29,350) |
| (1,184) | ||||
State |
| (33,706) |
| (13,553) |
| — | ||||
| (106,698) |
| (42,903) |
| (1,184) | |||||
Income tax benefit | $ | (105,098) | $ | (42,103) | $ | (384) | ||||
(ii)Reconciliations of the statutory income tax rate to the effective income tax rate were as follows:
| Successor | | Successor | | Predecessor |
| |
For the Period | For the Period |
| |||||
For the year | from October | from December |
| ||||
Ended | 26, 2024 to | 1, 2023 to |
| ||||
November 30, | November 30, | October 25, |
| ||||
2025 | 2024 | 2024 |
| ||||
| |||||||
Federal statutory tax rate |
| 21.0 | % | 21.0 | % | — | % |
State statutory tax rate | (0.1) | % | 3.0 | % | — | % | |
Non-deductible expenses | (2.9) | % | (11.7) | % | 0.5 | % | |
Return to Provision | (0.9) | % | — | % | — | % | |
Other |
| (0.2) | % | — | % | — | % |
Change in valuation allowance |
| (12.3) | % | — | % | — | % |
Effective tax rate |
| 4.6 | % | 12.3 | % | 0.5 | % |
(iii)Deferred tax liabilities were composed of the following:
| Successor | | Successor | |||
As of November 30, | As of November 30, | |||||
2025 | 2024 | |||||
Deferred tax assets: |
| |
| | ||
Net operating loss carry-forwards |
| 551,538 |
| 40,265 | ||
Depreciation expense |
| — |
| 2,400 | ||
Less: Valuation allowance |
| (410,994) |
| — | ||
Total deferred tax assets |
| 140,544 |
| 42,665 | ||
|
| |||||
Deferred tax liabilities: |
|
|
| |||
Customer relationship recognized upon JAR Acquisition |
| (136,448) |
| (149,363) | ||
Depreciation expense |
| (4,095) |
| — | ||
Total deferred tax liabilities |
| (140,544) |
| (149,363) | ||
Total deferred tax assets (liabilities) | $ | — | $ | (106,698) | ||
Valuation Allowance
The Company recognizes income taxes using the asset and liability method. Management establishes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of assets and liabilities, using the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are also recognized for tax attributes such as net operating loss carryforwards. Realization of the Company’s gross deferred tax asset depends on its ability to generate sufficient taxable income of the appropriate character within the carryforward periods of the jurisdictions in which the net operating and capital losses, deductible temporary differences and credits are generated. In assessing its ability to realize deferred tax assets, the Company considers all available evidence and records valuation allowances to reduce deferred tax assets to the amounts that management concludes are more-likely-than-not to be realized. As of November 30, 2025, the Company believes that a valuation allowance is required. As of November 30, 2024, no valuation allowance was required as the Company was in a net deferred tax liability position.
Uncertain Tax Position
The Company recognizes income tax benefits associated with uncertain tax positions, when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more likely than not recognition threshold, management initially and subsequently measures the tax benefit as the largest amount judged to have a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority. The Company has concluded that there are no uncertain tax positions requiring recognition in its financial statements as of November 30, 2025.
State Income Tax
To the extent there is state nexus based on sales, location of employees, inventory, and/or other property, a tax provision is prepared and recorded. In 2025, the Company identified nexus in California.
For the year ended November 30, 2025 (Successor), the Company recorded a tax benefit of $105,098. For the period from October 26, 2024 to November 30, 2024 (Successor) and for the period from December 1, 2023 to October 25, 2024 (Predecessor), the Company recorded a tax benefit of $42,103 and $384, respectively.
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.