VirTra, Inc Income Taxes Disclosure

Note 11. Income Taxes

 

The Company accounts for its deferred tax assets and liabilities, including excess tax benefits of share-based payments, based on the tax ordering of deductions to be used on its tax returns. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities for the years ended December 31 is as follows:

 

Schedule of Deferred Tax Assets and Liabilities

		2024				2023
		Year Ending December 31
		2025				2024
Deferred Tax Assets:
Net Operating Loss Carry Forwards		$	2,090,454			$	-
Tax Credits			1,225,923				729,111
Deferred Revenue			570,408				1,488,641
Stock Compensation			12,713				230,617
Reserves, Accrual and Other			241,270				281,995
Intangibles			1,035,153				1,726,212
Right of Use Liability			70,204				112,567
Total Deferred Tax Assets		$	5,246,125			$	4,569,143
Deferred Tax Liabilities:
Fixed Assets		$	(863,076	)		$	(641,880	)
Right of Use Asset			(66,146	)			(107,543	)
Inventory Capitalization			(181,440	)			(224,146	)
Total Deferred Tax Liabilities		$	(1,110,662	)		$	(973,569	)
Valuation Allowance			-				-
Net Deferred Taxes		$	4,135,463			$	3,595,574

 

Internal Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year period. The Company does not believe that such a limitation of the net operating losses has occurred.

 

Significant components of the provision (benefit) for income tax for the years ended December 31 are as follows:

 Schedule of Significant Components of Income Tax Provision

		2025				2024
Current		$	(158,161	)		$	853,256
Deferred			46,903				34,030
Change in valuation allowance			-				-
Provision (benefit) for income taxes		$	(111,258	)		$	887,286

 

The Company is subject to federal and state taxes. Reconciliations of the Company’s effective income tax rate to the federal statutory rate for the years ended December 31 are as follows:

 Schedule of Reconciliation of Income Tax Rate

		2025				2024
Federal income tax expense at the statutory rate			21.0	%			21.0	%
State income taxes, net of federal benefit			33.9	%			0.2	%
Research credits			56.2	%			(11.4	)%
Permanent differences			(13.7	)%			(5.6	)%
Prior period revenue adjustment			-				5.9	%
Other			(54.7	)%			3.5	%
Expiration of stock option compensation			-				10.7	%
Inventory tax capitalization method change			9.5	%			9.8	%
Change in valuation allowance			-				0.0	%
Provision (benefit) for income taxes			52.2	%			34.1	%