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

Note 6 – Income Taxes

 

The Company is subject to United States federal and state income taxes.

 

Our income (loss) before provision for income taxes for the years ended December 31, 2025 and 2024 was as follows:

 

   12/31/2025   12/31/2024 
Domestic  $(25,804,037)  $(9,406,690)
Foreign   

-

    - 
Income before income taxes  $(25,804,037)  $(9,406,690)

 

The components of income (loss) before provision for income taxes are as follows for the years ended December 31, 2025 and 2024:

 

   2025   2024 
   For the Years Ended 
   December 31, 
   2025   2024 
         
Current tax benefit:          
Federal  $-   $- 
State   -    23,240 
Current tax benefit   -    23,240 
           
Deferred tax benefit:          
Federal   (5,062,687)   (1,688,265)
State   (1,127,073)   (164,376)
Deferred tax benefit   (6,189,760)   (1,852,641)
Change in valuation allowance   5,338,101    1,859,386 
Provision for income taxes  $(851,659)  $6,745 

 

The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 in accordance with the guidance upon adoption of ASU 2023-09 was as follows:

 

Description  Amount   Percent 
   For the Year Ended 
   December 31, 2025 
Description  Amount   Percent 
U.S. Federal Statutory Tax Rate   (5,418,848)   21.0%
State Income Taxes, Net of Federal Income Tax Effect [1]   99,730    -0.4%
Valuation Allowance   4,297,670    -16.7%
Nontaxable or Nondeductible items   126,650    -0.4%
Other   43,139    -0.2%
Effective Tax Rate   (851,659)   3.3%

 

[1] State taxes in Florida made up the majority (greater than 50 percent) of the tax effect in this category.

 

The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

 

   For the Year Ended 
   December 31, 2024 
Federal statutory rate   21.0%
State tax rate, net of federal benefit   3.0%
Permanent items   (0.0)%
Stock Based Comp   (3.2)%
Effect of change in state rate   0.2%
Prior period adjustments and other   (1.3)%
Change in valuation allowance   (19.8)%
Other   0.0%
Effective income tax rate   (0.1)%

 

 

ZYVERSA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

The cumulative tax effect of significant items comprising our net deferred tax asset (liability) is as follows for December 31, 2025 and 2024:

 

Deferred tax asset attributable to:  2025   2024 
   As of 
   December 31, 
Deferred tax asset attributable to:  2025   2024 
Net operating loss carryforwards  $14,419,237   $12,544,318 
Stock-based compensation   3,099,252    3,155,058 
Capitalized research and development costs   1,360,579    1,753,207 
Capitalized start-up costs   650,957    781,342 
Capitalized licensing costs   563,812    609,669 
Capitalized patents   443,841    392,691 
Warrants   135,527    135,319 
Accrued Payroll   618,058    394,406 
Contributions carryforward   125    2,878 
Deferred tax asset   21,291,388    19,768,888 
Valuation Allowance   (21,291,388)   (15,953,288)
Deferred tax assets   -    3,815,600 
           
IPR&D   -    (4,667,259)
           
Deferred tax liability   -    (4,667,259)
           
Net deferred tax liability  $-   $(851,659)

 

As of December 31, 2025, the Company has federal net operating loss carryforwards totaling $59,859,961. All federal NOLs were generated in tax years beginning after December 31, 2017, and may be carried forward indefinitely. Utilization of these NOLs is limited to offsetting up to 80% of taxable income in any given year, in accordance with the Tax Cuts and Jobs Act. The NOL carryforwards are subject to limitations under Section 382 of the Internal Revenue Code in the event of a change in ownership.

 

The Company has state net operating loss carryforwards totaling $42,546,493 as of December 31, 2025. All NOLs were generated in tax years beginning after December 31, 2017, and may be carried forward indefinitely, subject to annual deduction limitations under state tax law.

 

A valuation allowance of $21,291,388 has been recorded against deferred tax assets, including carryforwards, where it is not more likely than not that such assets will be realized. The Company evaluates the realizability of carryforwards based on projections of future taxable income and other relevant factors.

 

Valuation Allowance  2025 
Valuation Allowance - beginning of period  $(15,953,288)
Additions charged to income tax benefit   - 
Allowances taken or written off   (5,338,100)
Other adjustments   - 
Valuation allowance - end of period  $(21,291,388)

 

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2025 and 2024.

 

 

ZYVERSA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

No tax audits were commenced or were in process during the years ended December 31, 2025 and 2024 and no tax-related interest or penalties were incurred during those years. The Company’s tax returns beginning with the year ended December 31, 2021 remain subject to examination.

 

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows:

 

Income Tax Paid  2025 
Federal  $- 
State and Local   - 
      
Total Income Taxes Paid, Net  $- 

 

Tax Law Change

 

On July 4th, 2025, the President signed into law significant federal tax legislation, H.R.1 (the “Tax Reform Act of 2025”). The legislation includes numerous changes to U.S. corporate income tax law, including but not limited to: permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, increased Section 179 expensing limits, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m). Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions.

 

The Company has evaluated the impact of the Tax Reform Act of 2025 on its consolidated financial statements. There was no material impact given the Company’s tax loss profile and valuation allowance position.