Sunshine Biopharma Inc. Income Taxes Disclosure

Note 13 – Income Taxes

 

The components of the provision for income taxes were as follows:

Schedule of provision for income taxes
Year Ended December 31,		2025				2024
Current:
Federal			–				–
State			–				50
Foreign			(73,330	)			(90,434	)
Total Current			(73,330	)			(90,384	)
Deferred:
Federal			–				–
State			–				–
Foreign			94,939				(144,474	)
Total Deferred			94,939				(144,474	)
Total Income Tax Expense / (Benefit)			21,609				(234,858	)

 

The Company’s effective tax rate differs from the federal statutory rate as follows:

Schedule of income tax expense
Year Ended December 31,			2025								2024
Pre-Tax Book Income			(1,250,286	)			21.00%				(1,121,714	)			20.89%
State and Local Income Taxes			44,533				(0.75%)				40				0.00%
Effect of Rates Different than Statutory			151,341				(2.54%)				62,181				(1.16%)
Other Foreign Taxes			–				0.00%				(119,181	)			2.22%
Permanent Adjustments			54,987				(0.92%)				56,092				(1.04%)
Change in Valuation Allowance			1,107,342				(18.60%)				569,920				(10.62%)
Rate Change			–				0.00%				149,237				(2.78%)
Prior Year True up			(86,308	)			1.45%				156,540				(2.92%)
Other			–				–%				12,027				(0.22%)
Total			21,609				(0.36%)				(234,858	)			4.37%

 

The components of the net deferred tax assets were as follows:

Schedule of components of net deferred tax assets
Year Ended December 31,		2025				2024
Deferred Tax Assets:
Net Operating Loss, Credits and Carryforwards			7,785,678				6,460,638
Fixed Assets			2,818				–
Intangibles			622,658				614,734
Research and Development			25,327				25,327
Other deferred tax assets			–				95,935
Lease Liability			9,232				252,407
Valuation Allowance			(8,445,713	)			(6,967,294	)
Total Deferred Tax Assets			–				481,747
Deferred Tax Liabilities:
Other deferred tax liabilities			–				(67	)
Fixed Assets			–				(141,396	)
Intangibles			–				–
Right-of-Use Assets			–				(248,050	)
Total Deferred Tax Liabilities			–				(389,513	)
Net Deferred Tax Liability			–				92,234

 

As of December 31, 2025, the Company has federal, state, foreign and provincial net operating loss carryforwards of approximately $26 million, $16.1 million, $4.3 million, and $3.3 million, respectively. Of the federal net operating loss forwards, approximately $9.4 million have expiration dates from 2027 to 2037. The remainder can be carried forward indefinitely but limited to 80% of taxable income. The foreign and provincial net operating loss carryforwards have a carryforward period of 20 years.

 

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset 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 those temporary differences are deductible. In making this determination, management considers all available positive and negative evidence affecting specific deferred assets, including the Company's past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry­back and carry-forward periods, and the implementation of the tax planning strategies.

 

Objective positive evidence is necessary to support a conclusion that a valuation allowance is not needed for all or a portion of deferred tax assets when significant negative evidence exists. Cumulative losses in recent years are the most compelling form of negative evidence considered by management in making this determination. For the years ended December 31, 2025 and 2024, management has determined that based on all available evidence, a valuation allowance of $8.4 million and $7.0, respectively is appropriate.

 

The Company’s evaluation of uncertain tax matters was performed for tax years ended through December 31, 2025. Generally, the Company is subject to U.S. audit for the years ended December 31, 2024, 2023, and 2022 and may be subject to examination for amounts relating to net operating loss carryforwards generated in periods prior to December 31, 2024. The company is subject to Canada audit for the years ended December 31, 2024, 2023, 2022 and 2021 for Sunshine Biopharma Canada Inc and subject to Canada audit for the years ended December 31, 2024, 2023 and 2022 and June 30, 2022 for Nora Pharma Inc and may be subject to examination for amounts relating to net operating loss carryforwards generated in periods prior to December 31, 2024.

 

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC Topic 740, Income Taxes, requires the tax effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted. Those effects, both current tax and deferred tax, are reported as part of continuing operations. The Company is currently assessing the impact of OBBBA on its Consolidated Financial Statements but currently does not believe that the OBBBA will have a material impact on the Company's income tax expense.