House of Doge Inc. Income Taxes Disclosure

NOTE 6 — INCOME TAXES

 

The Company, with stockholder’s consent, elected to be taxed as an “S Corporation” during the years prior to 2021 under the provisions of the Internal Revenue Code under Section 1362(a) and comparable state income tax law. As an S Corporation, the Company is generally not subject to corporate income taxes and the Company’s net income or loss is reported on the individual tax return of the stockholders of the Company. As a result of the UK Reorganization, the Company was no longer eligible to elect an S Corporation status for tax purposes and was subject to tax filings as a C-Corporation for the years ending 2021 through 2023. The Company filed all necessary Federal and State tax returns as a C-Corporation for the years ending 2021 through 2024, and has accrued $95,000 for any potential non-compliance penalties.

 

The Company identified its federal and New York state tax returns as its “major” tax jurisdictions. The periods for income tax returns that are subject to examination for the federal and New York tax jurisdictions are 2024, 2023 and 2022.The Company believes its income tax filing positions and deductions will be sustained on audit, and management does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no liabilities for uncertain tax positions have been recorded.

As a result of being in a tax-loss position, the Company has not recorded a tax provision for the years ending on December 31, 2025 or 2024. The net deferred income tax assets/liabilities in the December 31, 2025 and 2024 consolidated balance sheets include the following components:

 

		12/31/2025				12/31/2024
Deferred tax assets:
Stock Compensation Expense			-				646,033
Capitalized R&D Sec 174			-				100,251
Accrued Liabilities			267,238				-
Investment in Warrants			1,779,504				-
Charitable Contribution Carryforward			263				-
R&D Credit Carry Overs			28,664				-
Federal NOL (Loss Carryovers)			3,869,794				2,032,146
State NOL (Loss Carryovers)			946,257				736,934
Valuation Allowance			(6,891,719	)			(3,515,364	)
Total deferred tax Assets			-				-

 

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, the provision for income taxes for the year ended December 31, 2025, differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to pre-tax loss from operations as a result of the following differences:

 

		12/31/2025
U.S. Federal Statutory Tax Rate			(3,337,007	)			21.00	%
Tax Credits			1,130				-0.01	%
Equity Based Compensation			403,440				-2.53	%
Nontaxable or nondeductible items - Other			26,822				-0.17	%
State and local income taxes     , net of federal income tax effect (1)			(470,740	)			2.96	%
Changes in Valuation Allowance			3,376,355				-21.25	%
Income Tax (Benefit) Expense			-				0.00	%

 

(1)	The states that contribute to the majority (greater than 50%) of the tax effect in this category include New York for 2021 - 2024.

 

The provision for income taxes for the year ended December 31, 2024, differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to pre-tax loss from operations as a result of the following differences presented in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows: 

 

		12/31/2024
Expected Income Tax Benefit			21.00	%
State statutory income tax rate, net of federal benefit			5.00	%
Change in Valuation Allowance			-26.00	%
Income Tax (Benefit) Expense			0.00	%

 

Brag House Holdings, Inc. has U.S. Federal net operating loss (NOL) carryovers of $18,427,591 as of December 31, 2025. Under the Tax Cuts and Jobs Act (“TCJA”) Federal NOL’s incurred in taxable years beginning in 2018 and later have an indefinite carryforward period, but the use of the NOL carryover is limited to 80% of taxable income in the subsequent year. Federal NOL carryovers incurred prior to 2018 expire after 20 years. Brag House Holdings, Inc. has $0 of Federal NOL carryovers incurred prior to 2018. Brag House Holdings, Inc. has State NOL carryovers in New York of $18,427,591 which begin expiring in 2041. NOL carryovers are a benefit to Brag House Holdings, Inc. in the form of future tax savings and such carryovers are recorded as deferred tax assets, subject to a valuation allowance. Brag House Holdings, Inc. has provided a valuation allowance of 100% of its net deferred tax assets due to the uncertainty of generating future profits that would allow for the realization of such deferred tax assets.