Rain Enhancement Technologies Holdco, Inc. Income Taxes Disclosure

Note 11 — Income Taxes

The Company’s income tax provision consists of the following:

The Company’s net deferred tax assets are as follows:

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance as of December 31, 2025 and 2024.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income from continuing operations before income taxes as follows for the year ended December 31: 

The Company adopted ASU 2023-09, Improvements to Income Tax Disclosures, effective January 1, 2025 on a prospective basis. Accordingly, prior period disclosures have not been adjusted.

The Company’s income tax expense was related to taxes incurred in Massachusetts. The Company did not pay any other income taxes, net of refunds, during the year ended December 31, 2025. There were no unrecognized tax benefits or accruals for interest and penalties as of December 31, 2025 and 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has been subject to income tax examinations by major taxing authorities since inception. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. 

Legislative and Regulatory Considerations

In 2025, the U.S. government enacted federal tax legislation that modifies certain provisions of the Internal Revenue Code, including changes to the limitation on the deductibility of business interest expense under Section 163(j), the capitalization and amortization of research and experimental expenditures under Section 174, bonus depreciation rules, and certain loss and credit utilization provisions.

The Company evaluated the impact of the legislation in accordance with ASC 740, Income Taxes. The effects of changes in tax law are recognized in the period of enactment. Based on the Company’s analysis, the enactment of this legislation did not result in a material change to the Company’s deferred tax assets or liabilities as of December 31, 2025 and did not materially impact the Company’s effective tax rate for the year then ended.