Myseum.AI, Inc. Income Taxes Disclosure

NOTE 13 – INCOME TAXES

 

The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets on December 31, 2025 and 2024 consist of net operating loss carryforwards. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income.

 

The Company has incurred aggregate net operating losses of approximately $33,668,721 for income tax purposes as of December 31, 2025. The net operating losses carry forward for United States income taxes, which may be available to reduce future years’ taxable income. Management believes that the realization of the benefits from these losses appears unlikely due to the Company’s limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset resulting from the net operating losses to reduce the asset to zero. Management will review this valuation allowance periodically and make adjustments as necessary.

 

The components of loss before income taxes were as follows:

 

		2025				2024
Domestic		$	(3,040,119	)		$	(5,025,007	)
Total loss before income taxes		$	(3,040,119	)		$	(5,025,007	)

 

The Company has not recorded a current or deferred tax provision for years ended December 31, 2025 and 2024.

 

The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2025: 

 

		Year Ended December 31, 2025
		Amount				Percentage
Income tax benefit at U.S. statutory rate		$	(638,425	)		$	(21.0	)%
Income tax benefit – State			(152,006	)			(5.0	)%
Non-deductible expenses			225,245				7.4	%
Change in valuation allowance			565,186				18.6	%
Total provision for income tax		$	-			$	-

As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differed from the federal statutory income tax rate as follows:

 

		Year Ended December 31, 2024
		Amount				Percentage
Income tax benefit at U.S. statutory rate		$	(1,055,252	)			(21.0	)%
Income tax benefit – State			(251,250	)			(5.0	)%
Non-deductible expenses			81,214				1.6	%
Change in valuation allowance			1,225,288				24.4	%
Total provision for income tax		$	-

 

The Company’s approximate net deferred tax asset on December 31, 2025 and 2024 was as follows:

 

Deferred Tax Asset:		December 31, 2025				December 31, 2024
Net operating loss carryforward		$	8,753,867			$	8,188,681
Valuation allowance			(8,753,867	)			(8,188,681	)
Net deferred tax asset		$	-			$	-

 

Of the $33,668,721 of available net operating losses, $1,403,306 begins to expire in 2034 and $32,265,415 which were generated after 2018 can be utilized indefinitely subject to annual usage limitations.

 

The Company provided a valuation allowance equal to the deferred income tax asset for the years ended December 31, 2025 and 2024 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward. The increase in the allowance was $565,186 and $1,225,288 in years 2025 and 2024.

Additionally, the future utilization of the net operating loss carryforward to offset future taxable income may be subject to an annual limitation as a result of ownership changes that could occur in the future. If necessary, the deferred tax assets will be reduced by any carryforward that expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance.

 

The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2022, 2023, 2024 and 2025 Corporate Income Tax Returns are subject to Internal Revenue Service examination.