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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
INCOME TAXES

NOTE 8 – INCOME TAXES

 

The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The deferred tax assets on December 31, 2024 and 2023 consist of net operating loss carryforwards and the mandatory capitalization of research and development cost for tax purposes pursuant to Section 174, as revised by the Tax Cuts and Jobs Act (“TCJA”). The TCJA amended Section 174 relating to the federal tax treatment of research or experimental expenditures paid or incurred during the taxable year. The new Section 174 rules require taxpayers to capitalize and amortize specified research and experimental expenditures, including software development, over a period of five years (attributable to domestic research) or 15 years (attributable to foreign research). The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income. 

 

As of December 31, 2024 and 2023, components of deferred tax assets and liabilities are as follows:

 

   December 31,
2024		   December 31,
2023		 
Net operating loss carryforward  $     1,407,458   $        795,489 
Research and development   618,007    366,256 
Total deferred tax assets   2,025,465    1,161,745 
Valuation allowance   (2,025,465)   (1,161,745)
Net Deferred Tax Assets  $
-
   $
-
 

 

A reconciliation of the effective tax rate with the statutory Federal income tax rate was as follows for the years ended December 31, 2024 and 2023:

 

   For the
Year ended
December 31,
2024		   For the
Year ended
December 31,
2023		 
Federal tax benefit at statutory rate      (21.0)%      (21.0)%
State tax benefit, net of Federal tax benefit   (5.1)%   (5.1)%
Non-deductible expenses   0.9%   6.2%
Change in estimated effective tax rate   0.0%   (1.4)%
Change in valuation allowance   25.2%   21.3%
Effective tax rate   0%   0%

 

As of December 31, 2024, the Company had approximately $5,385,337 in net operating loss carry forwards for federal income tax purposes of which $5,385,337 may be carried forward indefinitely subject to annual usage limitations of 80% of taxable income. Generally, these can be carried forward and applied against future taxable income at the tax rate applicable at that time. The Company is currently using a 26.135% effective tax rate for its projected available net operating loss carry-forward.

 

In accordance with FASB ASC 740 “Income Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all of the deferred tax assets may or will not be realized. The Company has evaluated its ability to realize some or all of the deferred tax assets on its balance sheet for the coming year and has established a valuation allowance in the amount of $2,025,465 as of December 31, 2024 due to the uncertainty of generating taxable income. The valuation allowance increased in 2024 by $863,720.

 

The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2024, 2023 and 2022 Corporate Income Tax Returns are subject to Internal Revenue Service examination.