Twin Vee PowerCats, Co. Income Taxes Disclosure

14. Income Tax

 

Due to operating losses and the recognition of valuation allowances, the Company has no provision for current and deferred federal or state income taxes in 2024. In 2021, the Company reversed valuation allowances against previously reserved deferred tax assets, accordingly, there was no provision for current and deferred federal or state income taxes.

 

Deferred income taxes reflect the net tax effects of temporary and permanent differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows as of:

 

Schedule of deferred tax assets and deferred tax liabilities
		December 31,				December 31,
		2025				2024
Non-operating loss carryforward		$	29,300,000			$	16,700,000
Valuation allowance			(29,300,000	)			(16,700,000	)
Net deferred tax asset		$	—			$	—

 

The Company has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. During the years ended December 31, 2025 and 2024, the valuation allowance increased by approximately $12,600,000 and $8,100,000, respectively.

 

A reconciliation between expected income taxes, computed at the federal income tax rate of 21% applied to the pretax accounting loss, and our blended state income tax rate of 2%, and the income tax net expense included in the consolidated statements of operations for the years ended December 31, 2025 and 2024 is as follows:

 

Schedule of income tax rate
		December 31,				December 31,
		2025				2024
Tax at federal statutory rate			21.0	%			21.0	%
Tax at state rate net of federal benefit			2.0	%			2.0	%
Change in valuation allowance			(23.0	)%			(23.0	)%
Provision for taxes			0.0	%			0.0	%

 

The Company’s tax positions for 2020 to 2022 have been analyzed and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years. Tax returns for the years 2023 to 2024, are subject to review by the tax authorities.