Nakamoto Inc. Income Taxes Disclosure

NOTE 13—INCOME TAXES 

 

As of December 31, 2025 and 2024, the Company had net operating loss carry forwards of $48,059,205 and $4,615,303, respectively, that may be available to reduce future years’ taxable income. As of December 31, 2025, the Company has a net deferred tax asset of $13,964,902.

 

Deferred income tax assets and liabilities at December 31, 2025 and 2024, consisted of the following temporary differences and carry-forward items:

 SCHEDULE OF DEFERRED INCOME TAX ASSETS AND LIABILITIES

		December 31, 2025				December 31, 2024
Deferred tax assets
Deductible temporary differences, net		$	9,828,985			$	974,718
Loss carryforwards			48,059,205				4,615,303
Expected tax rate			24.6	%			24.6	%
Total deferred tax assets			14,237,311				1,374,838
Deferred tax liabilities
Deductible temporary differences, net			1,107,601				989,890
Expected tax rate			24.6	%			24.6	%
Total deferred tax liabilities			272,409				243,459
Deferred tax valuation allowance			(13,964,902	)			(1,131,379	)
Net deferred tax asset		$	-			$	-

 

The components for the income tax expense:

SCHEDULE OF INCOME TAX EXPENSE

		December 31, 2025				December 31, 2024
Taxable income
Financial statement pretax loss		$	(52,228,923	)		$	(3,239,916	)
Non-deductible expenses			48,465				8,978
Total taxable income			(52,180,458	)			(3,230,938	)
Decrease (increase) in taxable temporary differences			(117,711	)			(756,932	)
Increase in deductible temporary differences			8,854,267				912,718
Federal taxable loss		$	(43,443,902	)		$	(3,075,152	)

 

The valuation allowance roll forward as of December 31 is as follows:

 SUMMARY OF VALUATION ALLOWANCE

		2025				2024
Beginning balance		$	1,131,379			$	359,434
Increase due to current year activity			12,833,523				771,945
Ending balance		$	13,964,902			$	1,131,379

 

The schedule of effective tax rate reconciliation is as follows:

 SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

Year ended December 31,		2025								2024
Federal statutory rate			21.0	%		$	10,968,074				21.0	%		$	(680,382	)
State income tax rate, net of federal benefit			3.6	%			1,877,369				3.6	%			(116,459	)
Permanent differences			(0.0	)%			(11,920	)			(0.1	)%			2,208
Effect of tax rate change			0.0	%			-				(0.7	)%			22,688
Change in valuation allowance			(24.6	)%			(12,833,523	)			(23.8	)%			771,945
			0.0	%		$	-				0.0	%		$	-

 

 

Digital assets, in general are treated as property for U.S. Federal income tax purposes. However, the Company recognizes that digital assets can be tokenized in which case the underlying asset being tokenized would govern the tax treatment. As such, the Company generally does not recognize tax impacts on the unrealized gain or losses from digital assets. The Company generally incurs tax impacts when digital assets are sold or exchanged.

 

Cash paid for income taxes, net of refunds, was $0 and $0 for the years ended December 31, 2025 and 2024, respectively.

 

As of December 31, 2025 and 2024, the Company had no unrecognized tax benefits and did not have any accrued interest or penalties related to uncertain tax positions. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next twelve months. The valuation allowance represents the portion of our deferred tax assets for which it is more likely than not that the benefit of such items will not be realized.

 

The Company files income tax returns in the U.S. federal jurisdiction and the state of Utah. The Company’s tax years 2022 to current year remain open to examination by the major taxing authorities.