CleanCore Solutions, Inc. Income Taxes Disclosure
15. Income Taxes
The Company files income tax returns in the U.S. for federal and applicable foreign and state jurisdictions. Management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. The fiscal year ended June 30, 2023 was the entity’s initial year of existence, and is not subject to federal or state tax examinations prior to this period. The tax impact of the Irish subsidiary formation in the current tax year did not have a material impact on the Company’s tax provision. The One Big Beautiful Bill Act was not enacted until after the fiscal year end, therefore the effects are not included. The Company is still assessing what impact, if any, it will have, however given the fact the Company has a valuation allowance, management does not believe there will be a material impact.
The Company’s provision for income taxes is comprised of the following components:
| Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Current Tax Expense (Benefit) | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Current Tax Expense (Benefit) | $ | $ | ||||||
| Deferred Tax Expense (Benefit) | ||||||||
| Federal | ||||||||
| State | ||||||||
| Deferred Tax Expense (Benefit) | ||||||||
| Total Income Tax Expense (Benefit) | $ | $ | ||||||
The Company’s income tax expense from continuing operations for the year ended June 30, 2025 differed from the statutory federal rate of 21% as follows:
| Pre-Tax Book Net Loss | $ | (6,742,275 | ) |
| Years Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Rate Reconciliation | Amount | Percent | Amount | Percent | ||||||||||||
| Federal tax (benefit) at a statutory rate | $ | (1,415,877 | ) | 21.00 | % | $ | (479,166 | ) | 21.00 | % | ||||||
| State tax expense (benefit) | (399,524 | ) | 5.93 | % | (125,968 | ) | 5.52 | % | ||||||||
| Federal effect of State tax expense (benefit) | 83,900 | (1.24 | )% | |||||||||||||
| Effect of rate change | 72,965 | )% | ||||||||||||||
| True-up of deferred taxes | (208,366 | ) | 3.09 | % | ||||||||||||
| Other permanent differences | (512,813 | ) | 7.61 | % | 804 | (0.04 | )% | |||||||||
| Other items | 459 | (0.01 | )% | |||||||||||||
| Increase (decrease) in valuation allowance related to current period profit and loss activity | 2,379,256 | (35.29 | )% | 604,330 | (26.49 | )% | ||||||||||
| Total tax expense | $ | $ | ||||||||||||||
Deferred tax assets and liabilities consist of the following:
| Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Deferred Tax Assets | ||||||||
| Accrued expenses | $ | 76,058 | $ | 67,775 | ||||
| Equity compensation | 291,281 | 1,186,561 | ||||||
| Lease liabilities | 106,233 | 145,913 | ||||||
| NOL carryforwards | 3,961,538 | 720,498 | ||||||
| Valuation allowance | (4,315,623 | ) | (1,936,367 | ) | ||||
| Total Deferred Tax Assets | $ | 119,487 | $ | 184,379 | ||||
| Deferred Tax Liabilities | ||||||||
| Property and equipment | $ | 450 | $ | 24 | ||||
| Intangible assets | 5,851 | (31,881 | ) | |||||
| Prepaid expenses | (25,574 | ) | (13,288 | ) | ||||
| ASC 842 right of use asset | (100,214 | ) | (139,234 | ) | ||||
| Valuation allowance | ||||||||
| Total Deferred Tax Liabilities | $ | (119,487 | ) | $ | (184,379 | ) | ||
| Net Deferred Tax Asset (Liability) | $ | $ | ||||||
In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
As of June 30, 2025, the Company recognized a full valuation allowance on its net deferred tax asset to reflect the fact it is not more-likely-than-not to realize any portion of the asset.
| Years Ended June 30, | ||||||||
| Other Items – All Gross | 2025 | 2024 | ||||||
| Federal NOL Carryovers | $ | 14,216,453 | $ | 2,715,784 | ||||
| State NOL Carryovers | $ | 14,216,453 | $ | 2,715,784 | ||||
At June 30, 2025 and 2024, the Company had net operating loss carryforwards for Federal income tax purposes of $14,216,453 and $2,715,784, respectively, which would be available to offset future federal taxable income, if any, and would not be subset to expiration. At June 30, 2025 and 2024, the Company has net operating loss carryforwards for state income tax purposes of $14,216,453 and $2,715,784, which are available to offset future state taxable income, which is subject to expiration beginning in 2043.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 22, 2025 | Showing above |
| 2024 | Sep 20, 2024 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.