Trio Petroleum Corp Income Taxes Disclosure

NOTE 8 – INCOME TAXES

 

The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

 

Significant components of the Company’s deferred tax assets are summarized below.

 SCHEDULE OF DEFERRED TAX ASSETS

		As of October 31,				As of October 31,
		2025				2024
Deferred tax assets:
Net operating loss carry forwards		$	960,000			$	1,699,000
Total deferred tax asset			960,000				1,699,000
Valuation allowance			(960,000	)			(1,699,000	)
Net deferred tax asset		$	-			$	-

 

 

As of October 31, 2025 and 2024, the Company had approximately $960,000 and $1,669,000, respectively, in net operating loss carry-forwards for federal and state income tax reporting (tax effected) purposes. During fiscal 2025, the Company also formed Trio Canada, its wholly owned subsidiary, which generated approximately $30,000 (USD) of net income, which has been excluded from the U.S. tax provision and considered immaterial.

 

As a result of the Tax Cuts and Jobs Act of 2017, certain U.S. net operating loss carryforwards do not expire but are subject to an annual limitation on utilization.

 

The Company recorded a valuation allowance in the full amount of its net deferred tax assets since realization of such tax benefits has been determined by management to be less likely than not. The valuation allowance decreased by $739,000 and increased by $604,000 during the years ended October 31, 2025 and 2024, respectively.

 

A reconciliation of the statutory federal income tax benefit to actual tax benefit is as follows:

 SCHEDULE OF EFFECTIVE FEDERAL INCOME TAX RATE RECONCILIATION

		As of October 31,				As of October 31,
		2025				2024
Federal statutory blended income tax rates			(21	)%			(21	)%
State statutory income tax rate, net of federal benefit			-	%			-	%
Change in valuation allowance			21	%			21	%
Effective tax rate			-	%			-	%

 

As of the date of this filing, the Company has not filed its 2025 federal and state corporate income tax returns. The Company expects to file these documents as soon as practicable. Trio Canada has not yet filed its Canadian federal and provincial corporate income tax returns for the fiscal year ended October 31, 2025.

 

The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions in either the U.S. or Canada. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.