INCOME TAXES

9 Months Ended

Nov. 30, 2023

INCOME TAXES

INCOME TAXES

NOTE E. INCOME TAXES

The Company follows the provisions of FASB ASC 740, Income Taxes. The Company is not aware of any material unrecognized tax uncertainties as a result of tax positions previously taken.

The Company recognizes interest and penalties as interest expense when they are accrued or assessed.

The federal income tax returns of the Company for 2022, 2021, and 2020 are subject to examination by the IRS, generally for three years after they are filed.

The actual provision for income tax for the three and nine months ended November 30, 2023 and 2022 differ from the amounts computed by applying the U.S. federal income tax rate of 21% to the pretax loss as a result of the following:

	Three Months Ended November 30,
	2023		2022
Expected expense (benefit)	$	(90,933)	$	(53,054)
Taxed directly to Dr. Burzynski		90,933		53,054
Nondeductible expenses and other adjustments		(6,375)		2,728
Change in valuation allowance		6,375		(2,728)
State taxes		—		—
Provision for income tax	$	—	$	—

	Nine Months Ended November 30,
	2023		2022
Expected expense (benefit)	$	(204,230)	$	(147,062)
Taxed directly to Dr. Burzynski		204,230		147,062
Nondeductible expenses and other adjustments		4,433		5,845
Change in valuation allowance		(4,433)		(5,845)
State taxes		—		—
Provision for income tax	$	—	$	—

At November 30, 2023, the Company had a net deferred tax asset of $0, which includes a valuation allowance of $166,270. The Company’s ability to utilize net operating loss ("NOL") carryforwards and alternative minimum tax credit carryforwards will depend on its ability to generate adequate future taxable income. The Company has no historical earnings on which to base an expectation of future taxable income. Accordingly, a full valuation allowance for deferred tax assets has been provided.

As a result of the Tax Cuts and Jobs Act of 2017 (the "Act"), NOL carryforwards generated in years beginning after December 31, 2017, would carryforward indefinitely, and would apply to 80% of future taxable income. Under the Act, carrybacks of NOLs were disallowed. In March 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was enacted providing a five-year carryback for losses incurred in 2018, 2019, or 2020, which allows companies to modify tax returns up to five years prior to offset taxable income from those tax years. The CARES Act also temporarily suspended the NOL limit of 80% of taxable income.

As of November 30, 2023, the Company has net operating loss carryforwards in the amount of $473,902 that will expire between 2026 and 2038, and $114,988 that will carryforward indefinitely.