RESEARCH FRONTIERS INC Income Taxes Disclosure

(6) Income Taxes

 

Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carryforwards and deferred items have been fully reserved because it is not more likely than not that the Company will achieve profitable operations. The difference between the total income taxes at the federal statutory rate for each of the years ended December 31, 2025 and 2024 and the fact that no income tax benefit was recorded in each of these years is attributable to the change in the valuation allowance recorded in each year.

 

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2025 and 2024 are presented below:

 Schedule of Deferred Tax Assets

		2025				2024
Deferred tax assets:
Depreciation		$	115,000			$	112,000
Allowance for credit losses			291,000				263,000
Net operating loss carry-forwards			12,060,000				12,274,000
Stock option expense			298,000				232,000
Research and other credits			788,000				822,000
Lease liability			245,000				272,000
Amortization			-				257,000
Other			5,000				6,000
Total gross deferred tax assets			13,802,000				14,238,000
Deferred tax liabilities:
Lease liability			220,000				257,000
Total gross deferred tax liabilities			220,000				257,000
Valuation allowance			(13,582,000	)			(13,981,000	)
Net deferred tax		$	-			$	-

 

Upon adoption of ASU 2023-09, Improvements in Income Tax Disclosures, as described in Note 2, the reconciliation of income taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows:

 Schedule of Reconciliation Income Tax Expenses Benefit

		2025
		Amount				Percent of Net Loss
Income tax provision at federal statutory rate		$	(430,000	)			(21.0	)%
Valuation allowance			430,000				21.0	%
		$	-				-

 

The reconciliation of income taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2024, in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

 

		2024
Income tax provision at federal statutory rate		$	(275,000	)
Expired carryforwards and other			975,000
Change in valuation allowance			(700,000	)
Total income tax provision		$	-

 

In assessing the realizability of deferred tax assets, the Company 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 future taxable income during the period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon its historical operating losses, utilization of deferred tax assets cannot currently be determined. Accordingly, the Company has recorded a full valuation allowance against the deferred tax assets due to the uncertainty regarding the future utilization of the deferred tax assets for all periods presented.

 

At December 31, 2025, the Company had net operating loss carryforwards for federal income tax purposes of approximately $56,479,000. Net operating loss carryforwards accumulated through December 31, 2017 of approximately $41,115,000 will expire in varying amounts from 2026 through 2037. Net operating losses generated since 2018, totaling approximately $15,364,000, will carry forward indefinitely, but cannot offset more than 80% of taxable income. Research and other credit carryforwards of approximately $788,000 are available to the Company to reduce income taxes payable in future years principally through 2043. The Company’s ability to utilize its net operating loss carryforwards and its current year tax credits in future periods could be subject to the 382 limitation. The Company will need to complete an analysis to determine whether its net operating losses are subject to the 382 limitation. At December 31, 2025, the Company had net operating loss carryforwards for state income tax purposes of approximately $2,693,000. State net operating loss carryforwards subject to expiration are $2,515,000 and $178,000 do not expire.

 

No cash was paid, in federal, state or foreign jurisdictions, for income taxes for the years ended December 31, 2025 and 2024.