SUI Group Holdings Ltd. Income Taxes Disclosure

NOTE 13 — INCOME TAXES

The provision for/(benefit from) income taxes consisted of the following for the year ended December 31, 2025 and 2024:

The table below provides the updated requirements of ASU 2023-09 for 2025. See “Note 2 — Summary of Significant Accounting Policies” for additional details on the adoption of ASU 2023-09.

The effective income tax rate for the year ended December 31, 2025, differs from the statutory federal income tax rate as follows:

The Company’s effective tax rate of (0.28%) for the year ended December 31, 2025, is due primarily to state taxes and the application of a valuation allowance against the Company’s deferred tax assets.

As previously disclosed for the tax year ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

As of December 31, 2025, and 2024, we had a deferred tax asset of $0 and $770,000, respectively.  Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of our deferred tax assets and liabilities as of December 31, 2025, and 2024 were as follows:

Valuation allowances are established when the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. The Company's ability to realize its remaining deferred tax assets as of December 31, 2025 is primarily dependent upon generating sufficient taxable income of the proper character in future years. Management has concluded that there is not sufficient positive evidence to support the expected realization of these deferred tax assets primarily due to the fact that unrealized investment on digital assets as of December 31, 2025 is a source of future taxable benefit that will not be offset by future taxable income on minimal deferred tax liabilities. As part of the assessment of the amount of the valuation allowance, the Company considered that it has the ability and intent to execute tax planning strategies if necessary, including selling digital assets with a built-in-gain.

After consideration of all available evidence, the Company has concluded that, as of December 31, 2025, it is more likely than not that its deferred tax assets will not be realized. If the market value of digital assets changes in future periods, the Company will assess other sources of forecasted taxable income of proper character, which could result in the release of the valuation allowance.