Onfolio Holdings, Inc Income Taxes Disclosure
NOTE 15 - INCOME TAXES
The Company is subject to United States federal income taxes at an approximate rate of 21% and Delaware state tax rate of 8.7%. The components of the income tax provision on the consolidated statements of operations is as follows:
|
| Year Ended |
|
| Year Ended |
| ||
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Current tax expense |
|
|
|
|
|
| ||
Federal |
| $ | - |
|
| $ | - |
|
State |
|
| - |
|
|
| - |
|
Foreign |
|
| 17,390 |
|
|
| - |
|
Deferred tax expense (benefit) |
|
| - |
|
|
| - |
|
Provision for income taxes, total |
| $ | 17,390 |
|
| $ | - |
|
The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:
|
| Year Ended |
|
|
|
| Year Ended |
|
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| ||||||
|
| December 31, 2025 |
|
|
|
| December 31, 2024 |
|
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| ||||||
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Income tax benefit computed at the statutory rate |
|
|
|
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|
|
|
|
|
|
|
| ||||
Federal |
| $ | (537,129 | ) |
|
| 21 | % |
| $ | (372,528 | ) |
|
| 21 | % |
State |
|
| (199,085 | ) |
|
| 8 | % |
|
| - |
|
|
| - |
|
Foreign |
|
| 17,390 |
|
|
| (1 | )% |
|
| - |
|
|
| - |
|
Permanent differences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative |
|
| (227,469 | ) |
|
| 9 | % |
|
| - |
|
|
|
|
|
Other |
|
| 50,537 |
|
|
| (2 | )% |
|
| 227,771 |
|
|
| (13 | )% |
Temporary differences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and impairment of intangible assets |
|
| 344,277 |
|
|
| (13 | )% |
|
| - |
|
|
| - |
|
Other |
|
| 24,137 |
|
|
| (1 | )% |
|
| - |
|
|
| - |
|
Net operating loss carryforwards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
| 345,647 |
|
|
| (14 | )% |
|
| 144,757 |
|
|
| (8 | )% |
State |
|
| 199,085 |
|
|
| (8 | )% |
|
| - |
|
|
| - |
|
Foreign |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Penalties and interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Provision for income taxes, current |
| $ | 17,390 |
|
| (1 | )% |
| $ | - |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary differences |
| $ | - |
|
|
|
|
|
| $ | - |
|
|
|
|
|
Deferred tax provision (benefit) |
| $ | - |
|
|
|
|
|
| $ | - |
|
|
|
|
|
The Company has the following operating loss carry forwards.
|
| As of |
|
| As of |
| ||
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Net Operating loss carry forwards |
| $ | 1,471,817 |
|
| $ | 1,399,231 |
|
Valuation allowance |
|
| (1,471,817 | ) |
|
| (1,399,231 | ) |
Deferred tax assets |
| $ | - |
|
| $ | - |
|
As of December 31, 2025, the Company had approximately $7,009,000 of estimated U.S. federal net operating loss carryovers, which do not expire, and no state net operating loss carryovers available to offset future taxable income.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.