GrabAGun Digital Holdings Inc. Income Taxes Disclosure
Prior to the Business Combination, Metroplex was classified as an S-Corporation under the Internal Revenue Code. As an S-Corporation, the entity’s profits and losses were passed through directly to its owners for tax reporting purposes. Following the closing of the Business Combination, the Company’s status as an S-Corporation was terminated, and it became subject to taxation as a C-Corporation.
Income tax expense consisted of the following:
|
|
Year ended December 31, |
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|||||
|
|
2025 |
|
|
2024 |
|
||
Current: |
|
|
|
|
|
|
||
Federal |
|
$ |
— |
|
|
$ |
— |
|
State |
|
|
12 |
|
|
|
11 |
|
Total current expense |
|
|
12 |
|
|
|
11 |
|
Deferred |
|
|
|
|
|
|
||
Federal |
|
|
— |
|
|
|
— |
|
State |
|
|
— |
|
|
|
— |
|
Total deferred expense |
|
|
— |
|
|
|
— |
|
Total income tax expense |
|
$ |
12 |
|
|
$ |
11 |
|
The significant variance in the effective tax rate from the statutory tax rate for the years ended December 31, 2025 and 2024 was primarily due to the impact of permanent items, state taxes, change in tax status and the establishment of a valuation allowance. A reconciliation of the income tax expense computed at the statutory federal tax rate to the actual income tax expense consists of the following:
|
|
Year ended December 31, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
US Federal Statutory Income Tax Rate |
|
$ |
(524 |
) |
|
|
21.00 |
% |
|
$ |
947 |
|
|
|
21.00 |
% |
Domestic Federal Reconciling Items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-taxable income |
|
|
(172 |
) |
|
|
6.90 |
% |
|
|
(947 |
) |
|
|
(21.00 |
)% |
Other |
|
|
8 |
|
|
|
(0.34 |
)% |
|
|
— |
|
|
|
0.00 |
% |
Change in tax status |
|
|
201 |
|
|
|
(8.05 |
)% |
|
|
— |
|
|
|
0.00 |
% |
Domestic state and local income taxes, net of federal effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Texas (1) |
|
|
10 |
|
|
|
(0.39 |
)% |
|
|
11 |
|
|
|
0.24 |
% |
Change in valuation allowance |
|
|
489 |
|
|
|
(19.62 |
)% |
|
|
— |
|
|
|
0.00 |
% |
Effective tax rate |
|
$ |
12 |
|
|
|
(0.50 |
)% |
|
$ |
11 |
|
|
|
0.24 |
% |
(1) For the year ended December 31, 2025, state taxes in Texas made up 100% of the tax effect in this category.
The Company accounts for income taxes in accordance with the recognition and measurement provisions of ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, a valuation allowance is required when it is “more likely than not” that some or
all of the net deferred tax assets will not be realized. The determination of whether a valuation allowance is necessary requires careful evaluation of both positive and negative evidence, with the weight given to such evidence proportional to the extent it can be objectively verified. Based on its assessment, the Company has determined that a valuation allowance is necessary for its net deferred tax assets. The Company will continue to evaluate the need for a valuation allowance in future reporting periods based on all relevant information available at that time.
The components of the Company’s deferred taxes consist of the following:
|
|
Year ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Net operating loss carry-forwards |
|
$ |
642 |
|
|
$ |
— |
|
Stock-based compensation |
|
|
172 |
|
|
|
— |
|
Lease liability |
|
|
9 |
|
|
|
— |
|
Accruals |
|
|
124 |
|
|
|
— |
|
Charitable contributions |
|
|
6 |
|
|
|
— |
|
Total deferred tax assets |
|
|
953 |
|
|
|
— |
|
Valuation allowance |
|
|
(489 |
) |
|
|
— |
|
Net deferred tax assets |
|
$ |
464 |
|
|
$ |
— |
|
Deferred tax liabilities |
|
|
|
|
|
|
||
Intangible assets basis difference |
|
$ |
143 |
|
|
$ |
— |
|
Reserves |
|
|
15 |
|
|
|
— |
|
Property, plant, and equipment |
|
|
34 |
|
|
|
— |
|
Right-of-use asset |
|
|
8 |
|
|
|
— |
|
Prepaid |
|
|
264 |
|
|
|
— |
|
Total deferred tax liabilities |
|
$ |
464 |
|
|
$ |
— |
|
Net deferred tax assets |
|
$ |
— |
|
|
$ |
— |
|
As of December 31, 2025 and 2024, the Company had federal net operating loss (“NOL”) carryforwards of approximately $3.1 million and $0 respectively, which may be available to reduce future taxable income and may be carried forward indefinitely, but be limited to 80% of taxable income. As of December 31, 2025 and 2024, the Company had no combined state NOL.
ASC 740 provides guidance on the financial statement recognition and measurement for uncertain income tax positions that are taken or expected to be taken in a company’s income tax return. The Company has evaluated its tax positions and believes there are no uncertain tax positions as of December 31, 2025 and 2024.
In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into United States federal law. The Company expects to benefit from certain provisions contained in the OBBBA, including increased interest expense deductions and bonus depreciation, but the Company is still evaluating the impact of this law on its income tax disclosures and consolidated financial statements. The Company does not believe it will have a material impact on its consolidated financial statements.
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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.