FULL HOUSE RESORTS INC Income Taxes Disclosure

9. INCOME TAXES

In December 2023, the FASB issued ASU 2023-09, which the Company adopted prospectively as of January 1, 2025 (see Note 2). We do not operate in foreign jurisdictions. Foreign pretax income (if any), income tax expense, and income taxes paid were immaterial for all periods presented and have not been separately disaggregated. All pretax income was related to domestic, continuing operations for all periods presented.

The income tax expense attributable to the Company’s loss before income taxes consisted of the following:

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The Company adopted ASU 2023-09 for the year ended December 31, 2025 and applied the new disclosure requirements to the reconciliation of the federal income tax statutory rate and the Company’s effective tax rate as follows:

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Prior to the adoption of ASU 2023-09, the reconciliation of the federal income tax statutory rate and the Company’s effective tax rate for the year ended December 31, 2024 was as follows:

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Our effective income tax rates for the years ended December 31, 2025 and 2024 were (1.3%) and (0.5%), respectively. Our tax rates differ from the statutory rate of 21.0%, primarily due to the effects of changes in our valuation allowance, state taxes, and items that are permanently treated differently for GAAP and tax purposes.

The Company’s deferred tax assets (liabilities) consisted of the following:

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As of December 31, 2025 and 2024, the Company had $2.5 million and $1.9 million, respectively, of deferred tax liabilities relating to goodwill and other indefinite-lived intangibles, net of the maximum benefit allowed under the statute from the indefinite-lived DTAs.

During 2025, we continued to provide a valuation allowance against our deferred tax assets (“DTAs”), net of any available deferred tax liabilities, as applicable, based on our analysis of the timing of reversal of such deferred taxes. For 2025, the valuation allowance was $49.0 million, compared to $35.6 million for 2024.

In assessing the realizability of its DTAs, the Company considered whether it is “more likely than not” that some portion or all of the DTAs will not be realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considered all of the available positive and negative evidence when determining the need for a valuation allowance, including, but not limited to, the scheduled reversal of existing deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2025, the Company continues to provide a valuation allowance against its DTAs that cannot be offset by existing deferred tax liabilities. In accordance with Accounting Standards Codification 740 (“ASC 740”), this assessment has taken into consideration the jurisdictions in which these DTAs reside. The valuation allowance against DTAs has no effect on the actual taxes paid or owed by the Company. In the future, if it is determined that we meet the “more likely than not” threshold of utilizing our deferred tax assets as required under ASC 740, we may reverse some or all of our valuation allowance. We will continue to evaluate the need for the valuation allowance during each interim period in 2026.

As of December 31, 2025, the Company had gross federal net operating loss carryforwards totaling $95.1 million and state tax carryforwards of $267.6 million. In general, our federal tax net operating loss carryforwards can be carried forward indefinitely and our state tax carryforwards can be carried forward 20 years. The Company also has general business credits of $1.4 million, which begin to expire in 2035.

The Company’s utilization of net operating loss (“NOL”) and the general business tax credit carryforwards may be subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986 (the “IRC”), and similar state provisions due to ownership changes that may have occurred or that could occur in the future. These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by IRC Sections 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has completed a Section 382 analysis as of the date of this report and determined that there have not been any of such greater-than-50% ownership changes within a three-year period during the last five years that would prohibit the Company from utilizing all of its tax attributes.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is generally not subject to federal or state examination for periods prior to December 31, 2022. However, as the Company utilizes its NOLs, prior periods can be subject to examination.

There were no income taxes paid during the year ended December 31, 2025.

Management has made an annual analysis of its federal and state tax returns and concluded that the Company has no recordable liability, as of December 31, 2025 or 2024, for unrecognized tax benefits as a result of uncertain tax positions taken.

In July 2025, new U.S. tax legislation (“H.R. 1”) was signed into law, 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, H.R. 1 makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The Company continues to evaluate the new tax legislation, but does not expect it to have a material impact on the results of the Company’s operations.