INCOME TAXES

12 Months Ended

Dec. 31, 2024

NOTE 3 – INCOME TAXES

Income tax provision (benefit) consists of the following for the twelve months ended December 31, 2024 and 2023:


	Years Ended
	December 31,
	2024		2023

INCOME TAX PROVISION (BENEFIT):
Current
Federal	$	—	$	—
State, net of federal benefit		—		—
Valuation Allowance		—		—
Total current		—		—
Deferred:
Federal		(14,170)		(15,326)
State, net of federal benefit		(4,450)		(5,139)
Valuation Allowance		18,620		20,465
Total deferred		—		—
Total income tax provision (benefit)	$	—	$	—

A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to net income before income tax provision (benefit) is as follows:


	Twelve Months Ended
	December 31,
	2024				2023
	$		%		$		%

Federal income tax provision (benefit) at statutory rate	$	(14,186)	21.0	%	$	(15,326)	21.0	%
State tax expense net of federal tax benefit		(4,767)	7.0	%		(5,041)	6.9	%
Nondeductible expenses		16	0.0	%		—	0.0	%
Expiration of net operating losses		—	0.0	%		—	0.0	%
Return-to-provision adjustments		317	(0.5)	%		(98)	0.1	%
Change in valuation allowance		18,620	(27.5)	%		20,465	(28.0)	%
Income tax provision (benefit)	$	—	0.0	%	$	—	0.0	%

Deferred tax assets and liabilities are recognized for future tax consequences between the carrying amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Significant deferred tax assets and liabilities, consist of the following:


	Twelve Months Ended
	December 31,
	2024		2023

DEFERRED TAX ASSETS, NET
Net operating loss carryforward	$	221,262	$	206,442
Related party accruals		7,413		3,613
Total deferred tax assets	$	228,675	$	210,055
Valuation allowance		(228,675)		(210,055)
Net deferred tax assets	$	—	$	—

At December 31, 2024, the Company has a federal net operating loss carry-forward of $801,649 available to offset future federal taxable income. The Company’s remaining federal net operating loss carry-forward will expire between 2026 and 2037, with the exception of $447,388 which may be carried forward indefinitely. Utilization of future net operating losses may be limited due to ownership changes under applicable sections of the Internal Revenue Code.

At December 31, 2024, the Company has a state net operating loss carry-forward in California of $757,723 available to offset future state taxable income in that state. The Company’s remaining California net operating loss carry-forward will expire between 2028 and 2037, with the exception of $413,293 which may be carried forward indefinitely. Utilization of future net operating losses may be limited due to ownership changes under applicable sections of the California Revenue and Taxation Code.

At December 31, 2024, the Company also has a state net operating loss carry-forward in Florida of $250,715 available to offset future state taxable income in that state. The Company’s remaining Florida net operating loss carry-forward will expire between 2026 and 2033. Utilization of future net operating losses may be limited due to ownership changes under applicable sections of the Florida Income Tax Code. Because the Company no longer has taxable nexus in Florida, we do not expect to have taxable income there in the future. As a result, the Company permanently wrote off the related deferred tax assets. However, since the Company maintained a full valuation allowance against these deferred tax assets, this write-off had no impact on tax expense.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, cumulative losses, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of December 31, 2024. The valuation allowance at December 31, 2024 was $228,675, an increase of $18,620 from December 31, 2023 when the balance was $210,055. The valuation allowance increased due to additional tax losses in 2024, and additional related party accruals, which are not deductible until paid.

Under GAAP, we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

U.S. federal income tax returns after 2020 remain open to examination. Generally, state income tax returns after 2018 remain open to examination. No income tax returns are currently under examination. The Company has state net operating loss (NOL) carryforwards that may not be recognized by certain jurisdictions, including California. However, as the deferred tax asset associated with these NOLs is fully offset by a valuation allowance, no liability for uncertain tax positions has been recorded.

As of December 31, 2024, and December 31, 2023, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2024 and December 31, 2023, there were no penalties or interest recorded in income tax expense.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

RIDGEFIELD ACQUISITION CORP 10-K