Jet.AI Inc. Income Taxes Disclosure

NOTE 10 – INCOME TAXES

 

For the years ended December 31, 2024 and 2023, the Company did not record a current or deferred income tax expense or benefit due to current and historical losses incurred by the Company. The Company’s losses before income taxes consist solely of losses from domestic operations.

 

A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:

 

SCHEDULE OF RECONCILIATION OF INCOME TAX EXPENSE (BENEFIT)

		2024				2023
Statutory US Federal tax rate			21.0	%			21.0	%
Permanent differences:
State and local income taxes, net of Federal benefit			0.0	%			0.0	%
Stock compensation			-7.0	%			-11.1	%
Other			0.0	%			-0.1	%
Temporary differences			-0.4	%			-1.3	%
Valuation allowance			-13.6	%			-8.5	%
Total			0.0	%			0.0	%

 

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 are comprised of the following:

 

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

		2024				2023
Deferred tax asset attributable to:
Net operating loss carryover		$	4,299,000			$	2,529,000
Valuation allowance			(4,299,000	)			(2,529,000	)
Net deferred tax asset		$	-			$	-

 

 

The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards. Management has considered the Company’s history of cumulative net losses in the United States, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its U.S. federal and state deferred tax assets. Accordingly, a full valuation allowance has been established against these net deferred tax assets as of December 31, 2024 and 2023, respectively. The Company reevaluates the positive and negative evidence at each reporting period. The Company’s valuation allowance increased during 2024 by approximately $1,770,000 primarily due to the generation of a net operating loss of approximately $8,200,000.

 

At December 31, 2024, the Company had federal net operating loss carry forwards of approximately $20,400,000. The federal operating losses since inception have no expiration.

 

Utilization of the U.S. federal and state net operating loss may be subject to a substantial annual limitation under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss that can be utilized annually to offset future taxable income and tax liabilities, respectively. The Company is currently performing an analysis but has not completed its study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization.

 

The Company is subject to tax in the United States (“U.S.”) and files income tax returns in the U.S. Federal jurisdiction and several states and local jurisdictions where the Company has determined it has tax nexus. The Company is subject to U.S. Federal, state and local income tax examinations by tax authorities for all periods since Inception. The Company currently is not under examination by any tax authority.