U.S. GOLD CORP. Income Taxes Disclosure

NOTE 13 — INCOME TAX

 

The deferred tax assets and deferred tax liabilities are summarized as follows:

 

 SCHEDULE OF NET DEFERRED TAX ASSET AND LIABILITIES

Deferred tax assets:		April 30, 2025				April 30, 2024
Net operating loss carryover		$	14,586,000			$	12,317,000
Stock-based compensation			1,350,000				948,000
Exploration costs			345,000				386,000
Accrued remediation costs			56,000				22,000
Other			12,000				15,000
Subtotal			16,349,000				13,688,000
Less: valuation allowance			(14,619,000	)			(11,949,000	)
Total deferred tax assets		$	1,730,000			$	1,739,000

 

Deferred tax liabilities:		April 30, 2025				April 30, 2024
Acquired mineral rights in excess of tax basis in a tax-free merger		$	(2,152,000	)		$	(2,152,000	)
Other			(8,000	)			(17,000	)
Total deferred tax liabilities		$	(2,160,000	)		$	(2,169,000	)
Net deferred tax assets (liabilities)		$	(430,000	)		$	(430,000	)

 

The Company has a net operating loss carryforward for federal tax purposes totaling approximately $69.4 million at April 30, 2025. Approximately $11.3 million expires between the years 2029 and 2038, with approximately $58.1 million net operating losses incurred after December 31, 2017 that do not expire and can be utilized to offset up to 80% of future taxable income. As of April 30, 2023, the Company had identified certain adjustments that were required to past tax return filings, including those related to capitalized exploration expenses and share-based compensation. These adjustments were made to the Company’s net operating loss carryforward in the federal tax return for the year ended April 30, 2023. These adjustments are reflected in the carryforward amounts disclosed above. The Company does not have any state net operating loss carryforwards. The Company primarily operates in the states of Wyoming and Nevada which do not impose a corporate income tax. Any minor apportionment that may occur to any other taxable state will be immaterial to current and future operations of the Company. Therefore, the effective state tax rate used in the calculation of the Company’s deferred tax is 0%.

 

On August 10, 2020, the Company acquired mineral rights totaling $10,249,632 (see Note 4 — Mineral Rights) in a tax-free reorganization pursuant to IRC Section 368. The Company recorded the assets at fair value for financial reporting purposes and retained the seller’s tax basis which was zero resulting in a deferred tax liability on the business combination date. As required by ASC 740, the Company has recognized the deferred tax impact of acquiring the mineral rights asset in this transaction, with the amount paid exceeding the tax basis of the asset on the acquisition date. A portion of the deferred tax liability is offset by deferred tax assets recognized by the Company. The remaining portion of the deferred tax liability is not offset by deferred tax assets due to the indefinite life of the mineral rights. As of April 30, 2025, the Company’s remaining net deferred tax assets have been offset with a full valuation allowance as management is unable to conclude that it is not more-likely-than-not that the deferred tax assets will expire unrealized. 

 

 

U.S. GOLD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2025

 

The differences between the provision (benefit) for federal income taxes and federal income taxes computed using the U.S. statutory tax rate of 21% were as follows:

 SCHEDULE OF EFFECTIVE TAX RATE

		Years Ended April 30,
		2025								2024
Federal income tax provision (benefit) based on statutory rate		$	(4,317,000	)			21.0	%		$	(1,448,000	)			21.0	%
State income tax provision (benefit), net of federal taxes			—				—	%			—				—	%
Change in fair value of warrant liabilities			1,620,000				(7.9	)%			(66,000	)			1.0	%
Change in prior year estimate			(6,000	)			—	%			(14,000	)			0.2	%
Prior year deferred tax adjustment			—				—	%			—				—	%
Federal net operating loss expiration			—				—	%			335,000				(4.9	)%
Other nondeductible expenses			33,000				(0.1	)%			18,000				(0.3	)%
Increase (decrease) in valuation allowance			2,670,000				(13.0	)%			1,175,000				(17.0	)%
Total tax provision (benefit) on income (loss)		$	—				—	%		$	—				—	%

 

The Company has assessed its tax positions and has determined that it has not taken a position that would give rise to an unrecognized tax liability being reported. In the event that the Company is assessed penalties and/or interest, penalties will be charged to other operating expenses and interest will be charged to interest expense.

 

The Company operates exclusively in the United States and in various state jurisdictions, primarily the states of Wyoming and Nevada. For both federal and state income tax purposes, the Company’s fiscal 2022 through 2025 tax years remain open for examination by the tax authorities under the general three-year statute of limitations. However, due to the Company’s federal net operating loss carryforward, the Internal Revenue Service has the ability to adjust this carryforward even if the losses were incurred in years that would otherwise be closed under the statute of limitations.