SPLASH BEVERAGE GROUP, INC. Income Taxes Disclosure

Note 12 – Tax Provision 

 

The Company has evaluated the positive and negative evidence in assessing the realizability of its deferred tax assets. This assessment included the evaluation of scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax planning strategies to determine which deferred tax assets are more likely than not to be realized in the future. Due to uncertainty about the Company’s ability to utilize its deferred tax assets, the Company has recorded a full valuation allowance against its deferred tax assets.

 

On December 31, 2025, the Company’s net operating loss carryforward for Federal income tax purposes was $128,566,840, which will be available to offset future taxable income. If not used, these carry forwards will begin to expire in 2032, except for the net operating losses generated January 1, 2018 and after, which can be carried forward indefinitely.

 

There was no income tax expense or benefit for the years ended December 31, 2025 and 2024 due to the full valuation allowance recorded.

 

The reconciliation of the income tax benefit is computed at the U.S. federal statutory rate as follows:

 

Schedule of effective income tax rate reconciliation
		2025				2024
Federal Statutory Tax Rate			21.00	%			21.00	%
Permanent Differences			(6.93	%)			(1.57	%)
Change in Valuation Allowance			(14.07	%)			(19.43	%)
Net deferred tax asset			—				—

 

The tax effects of temporary differences which give rise to significant portions of deferred tax

 

assets or liabilities on December 31 are as follows:

 

Schedule of deferred tax assets or liabilities
		2025				2024
Deferred Tax Assets:
Net Operating Losses		$	32,585,266			$	31,444,821
Accrued Interest/Interest Expense Limitation			5,311,062				2,251,164
Total deferred tax assets			37,896,328				33,695,985
Deferred Tax Liabilities:
Depreciation			(235,827	)			(145,467	)
Total deferred tax liabilities			(235,827	)			(145,467	)
Less: Valuation allowance			(37,660,500	)			(33,550,518	)
Total Net Deferred Tax Assets		$	—			$	—

  

The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The open tax years subject to examination with respect to the Company’s operations are 2015 through 2025.