Income Tax

9 Months Ended

Jun. 30, 2025

Note 10 – Income Tax

At June 30, 2025 and September 30, 2024, the Company had net operating loss (“NOL”) carry-forwards for income tax purposes. For federal income tax purposes, NOLs arising in tax years beginning after 2017 may only reduce 80% of a taxpayer’s taxable income and may be carried forward indefinitely; for California income tax purposes, the entire NOL can be carried forward up to 20 years. However, the coronavirus Aid, Relief and Economic Security Act (“the CARES Act”), issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carry-back period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The Company estimated NOL carry-forwards for Federal and California income tax purposes of $5.73 million and $5.69 million for each of Federal and California state at June 30, 2025, respectively. No tax benefit was reported with respect to these NOL carry-forwards in the accompanying consolidated financial statements because the Company believes the realization of the Company’s net deferred tax assets for the NOL for both federal and California State of approximately $1.60 million as of June 30, 2025, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a full valuation allowance.

Components of deferred tax assets as of June 30, 2025 and September 30, 2024 are as follows:

	June 30, 2025			September 30, 2024
Net deferred tax assets:
Expected income tax benefit from NOL carry-forwards	$	1,600,230		$	1,502,064
Allowance for non-current prepaid expense		279,836			279,836
Lease expense under ASU 842		-			168
Less valuation allowance		(1,880,066	)		(1,782,068	)
Deferred tax assets, net of valuation allowance	$	-		$	-

Income Tax Provision in the Statements of Operations

A reconciliation of the consolidated federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes for the nine months ended June 30, 2025 and 2024 is as follows:

	2025			2024

Federal statutory income tax expense (benefit) rate		(21.00	)%		(21.00	)%
State statutory income tax (benefit) rate, net of effect of state income tax deductible to federal income tax		(5.80	)%		(3.00	)%
Change in valuation allowance on net operating loss carry-forwards		27.99	%		27.99	%
Effective income tax rate		1.19	%		3.99	%

A reconciliation of the consolidated federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes for the three months ended June 30, 2025 and 2024 is as follows:

	2025			2024

Federal statutory income tax expense (benefit) rate		(21.00	)%		(21.00	)%
State statutory income tax (benefit) rate, net of effect of state income tax deductible to federal income tax		(6.98	)%		(6.98	)%
Change in valuation allowance on net operating loss carry-forwards		27.98	%		27.98	%
Effective income tax rate		-	%		-	%

- Definition

The entire disclosure for income tax.

+ References

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+ Details

FUSE GROUP HOLDING INC. 10-Q