Income Tax

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Tax

NOTE 12 - Income Tax

Effective Tax Rate Reconciliation, for the three months ended March 31, 2024
		%			$
Pretax Book Income	1,502,938		21.25	%		319,332
Permanent Differences	22,627		0.32	%		4,808
State income tax	85,997		7.59	%		114,055
Other Deferred adjustment	-		-0.07	%		(1,071	)
Total Tax expense			29.08	%		437,124

HOUR LOOP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Effective Tax Rate Reconciliation, for the three months ended March 31, 2023
			%			$
Pretax Book Loss	(1,660,200	)		21.98	%		(364,837	)
Permanent Differences	85,465			-1.13	%		18,781
Other Deferred adjustment	-			4.75	%		(78,900	)
Total Tax benefits				25.6	%		(424,956	)

	Current		Deferred		Total
Tax Expense Summary, for the three months ended March 31, 2024	Income Tax Expense		Income Tax Expense		Income Tax Expense
Federal	$	-	$	304,796	$	304,796
State		85,997		46,331		132,328
Total tax expense	$	85,997	$	351,127	$	437,124

	Current		Deferred			Total
Tax Expense Summary, for the three months ended March 31, 2023	Income Tax Benefit		Income Tax Expense			Income Tax Benefit
Federal	$	-	$	(361,568	)	$	(361,568	)
State		-		(63,388	)		(63,388	)
Total tax benefit	$	-	$	(424,956	)	$	(424,956	)

HOUR LOOP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at March 31, 2024 and December 31, 2023 were as follows:

	Deferred Tax		Deferred Tax
	Assets		Assets
Deferred Tax Assets Summary	March 31, 2024		December 31, 2023
Federal	$	797,040	$	1,101,836
State		156,048		202,379
Total	$	953,088	$	1,304,215

	Deferred Tax		Deferred Tax
	Assets		Assets
Deferred Tax Assets Summary	March 31, 2024		December 31, 2023
Operating lease right of use lease assets	$	2,085	$	172
Inventories allowance		159,975		169,725
Net loss carry forward		791,028		1,134,318
Total	$	953,088	$	1,304,215

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Based on management’s evaluation, there was no provision necessary for material uncertain tax position for the Company on March 31, 2024 and December 31, 2023.

For the three months ended March 31, 2024 and 2023, the Company reported net operating income (loss) of $1,065,814 and $(1,235,244), respectively. The net operating loss carryforward is not subject to any expiration period under federal regulations, while at the state level, the expiration period usually ranges up to 20 years, or there may be no expiration period at all.

The Company expects to generate sufficient taxable income in future periods against which the deferred tax assets can be utilized. Accordingly, a valuation allowance may not be needed.