ENDRA Life Sciences Inc. Income Taxes Disclosure

Note 12 - Income Taxes

The components of earnings before income taxes for the years ended December 31, 2024 and 2023 were as follows:              

Income tax provision (benefit) consists of the following for the years ended December 31, 2024 and 2023:

A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows:

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows:

The domestic U.S. net operating loss carryforward increased from $62,032,405 at December 31, 2023 to $72,521,129 at December 31, 2024. After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2024 and 2023, due to the uncertainty of realizing the deferred income tax assets. Out of the $72,521,129 net operating losses carry forward, $16,012,698 will begin to expire in 2028 and $56,508,431 will have an indefinite life. The Company’s Total State net operating losses also increased from $74,926,792 at December 31,2023 to $84,972,922 at December 31, 2024. The State net operating losses will began to expire in 2028. There are also net operating losses from Canada, France, Germany, Netherlands and UK total to 5,498,797 as of December 31, 2024.

The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5% tax on certain income of controlled foreign corporations. We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. U.S. federal income tax returns for 2021 and after remain open to examination. We and our subsidiaries are also subject to income tax in multiple states and foreign jurisdictions. Generally, foreign income tax returns after 2021 remain open to examination. No income tax returns are currently under examination. As of December 31, 2024 and 2023, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2024 and 2023, there were no penalties or interest recorded in income tax expense.