Annual report [Section 13 and 15(d), not S-K Item 405]

Income tax

v3.26.1
Income tax
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income tax

Note 19 – Income tax

 

The Company operates solely within the United States and is subject to U.S. federal income tax, and franchise tax in Delaware and Texas.

 

    2025     2024  
Components of loss before income tax consists of the following:                
Domestic   $ (574,119 )   $ (824,176 )
Foreign     -       -  
Loss before income tax   $ (574,119 )   $ (824,176 )

 

Income tax benefit for the years ended December 31, 2025 and 2024 consists of the following:

 

    2025     2024  
Current taxes from continuing operations:                
Federal   $ -     $ -  
State     4,442       15,329  
Total current expense     4,442       15,329  
                 
Deferred tax asset:                
Federal     138,400       98,300  
State of California     -       (156,600 )
Change in valuation     (138,400 )     58,300  
Total provision (benefit)   $ 4,442     $ 15,329  

 

During the fiscal year ended December 31, 2025, the Company adopted ASU 2023-09 to enhance the disclosures regarding income taxes paid and the rate reconciliation disclosure. The income taxes paid by the Company are as follows for the years ended December 31, 2025 and 2024:

 

    2025     2024  
Federal   $ -     $ -  
State Franchise                
Texas     4,442       10,079  
Delaware     -       5,250  
Total income tax   $ 4,442     $ 15,329  

 

The Company has net deferred tax assets resulting from a timing difference in recognition of unrealized losses and from net operating loss carryforwards.

 

At December 31, 2025, the Company had approximately $7,300,000 of federal net operating loss carryforwards, of which approximately $4,800,000 can be carried forward indefinitely, and the remaining $2,500,000 will begin to expire in 2034 and be fully expired by the year 2037. The Company has a California net operating loss carryforward of approximately $6,600,000 that begins expiring in 2034. Mentor relocated to Texas in September 2020, and the Company’s ability to utilize the California net operating loss carryforwards is dependent on the future generation of California taxable income. The Company has approximately $42,000 of federal capital loss carryforward, which will expire in 2029.

 

 

Mentor Capital, Inc.

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

 

The income tax provision (benefit) differs from the amount computed by applying the U.S. federal statutory corporate income tax rate of 21% in 2025 and 2024, respectively, to net income (loss) before income taxes for the years ended December 31, 2025 and 2024 as a result of the following:

 

    $     %     $     %  
    2025     2024  
    $     %     $     %  
Loss before income taxes   $ (569,677 )           $ (824,176 )        
U.S. Federal Statutory Tax     (119,632 )     21.0 %     (173,077 )     21.0 %
Current State and Local Income Taxes,     -       -       -       -  
Net of Federal Income Tax Effect     4,442       (1.1 )%     15,329       (1.9 )%
Other Adjustments     (18,768 )     3.2 %     231,377       (28.1 )%
Change in Valuation     138,400       (24.2 )%     (58,300 )     7.1 %
Effective Tax Rate   $ 4,442       (1.1 )%   $ 15,329       (1.9 )%

 

The Company is a Delaware corporation headquartered in the state of Texas. Delaware charges an annual franchise tax in lieu of income taxes. The Delaware corporate franchise tax is an annual privilege fee required of all corporations formed in the state, regardless of whether they conduct business in Delaware or earn any income there. The tax calculation for corporations involves two different methods; entities typically select the method that results in the lower tax liability. Corporations may choose between the Authorized Shares Method, the state’s default method, or the Assumed Par Value Capital Method. The Company has selected the Assumed Par Value Capital Method, which takes into account the Company’s total gross assets and total issued shares to determine the assumed par value of capital. Delaware annual corporate franchise taxes were $4,442 and $5,250 for the years ended December 31, 2025 and 2024.

 

Similar to the state of Delaware, the state of Texas does not charge business income tax. However, a franchise tax is imposed on a business if its annual revenue exceeds $2.47 million for the years ended December 31, 2025 and 2024. Because the Company’s net income was $(574,119) and $(839,505) for the years ended December 31, 2025 and 2024, no franchise tax was owed. The Company paid Texas annual corporate franchise taxes of $0 and $10,079 in the years ended December 31, 2025 and 2024. The Company’s 2024 payment of $10,079 to the Texas Comptroller of Public Accounts was based on the Company’s net income before income tax of $3,087,919 in 2023.

 

The significant components of deferred income tax assets as of December 31, 2025 and 2024 after applying enacted corporate income tax rates are as follows:

 

    2025     2024  
Net operating losses carried forward   $ 2,115,000     $ 1,957,000  
Capital losses carried forward     9,000       -  
Deferred - other     26,000     54,000  
Valuation allowance     (2,150,000 )     (2,011,000 )
Deferred tax assets   $ -     $ -  

 

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. All tax years from 2022 to 2025 are subject to examination.