FEDERAL INCOME TAX MATTERS

12 Months Ended

Dec. 31, 2024

FEDERAL INCOME TAX MATTERS

FEDERAL INCOME TAX MATTERS

(5) FEDERAL INCOME TAX MATTERS

Deferred income tax assets and liabilities are recorded based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. For the tax years ended December 31, 2024, the Company’s U.S Federal statutory tax rate was 21%. The Company is also subject to the Texas Gross Margin tax of .75% of modified taxable income as determined for Texas purposes. This combination results in a marginal blended tax rate of approximately 21.6%.

At each of December 31, 2024, and 2023, the tax effected amount of U.S. Federal net operating loss carryforwards (“NOLs”) totaled $6.8 and $6.1 million respectively. As of December 31, 2024, $1.4 million in NOLs will begin to expire in varying amounts between 2036 and 2037, and the remaining $5.4 million can be carried forward indefinitely.

The Company has determined, after weighing both positive and negative evidence, that the net deferred tax asset (DTA) for the Company is not more-likely- than-not to be realizable. Therefore, a valuation allowance of $4.9 million was established at December 31, 2024 to completely offset the DTA as of that date.

During the current period, the Company has estimated a taxable loss. This NOL will be carried forwarded indefinitely with no expiration and is fully offset with a valuation allowance. As such, the Company has not recorded any current income tax expense or benefit for the period. All of the Company’s federal and state tax returns for 2020 through 2023 remain open to examination.

The provision for income taxes for the years ended December 31, 2024 consisted of the following:

Years Ended December 31,	2024
Current (expense) benefit:
Federal	$	-
State		-
Total current (expense) benefit		-
Deferred (expense) benefit:
Federal		-
State		-
Total deferred (expense) benefit		-
Total benefit (expense):
Federal		-
State		-
Total benefit (expense)	$	-

As of December 31, 2024, the Company has not recorded a reserve for uncertain tax positions.

The components of the net deferred tax assets (liabilities) in the Fund’s balance sheets were as follows:

As of December 31,	2024
Deferred tax assets: Charitable Contributions	$	4,347
Net operating loss carryforwards		6,754,679
Total Deferred Tax Assets		6,759,026
Valuation allowance		(4,892,336	)
Deferred Tax Assets after Valuation Allowance Deferred tax liabilities:		1,866,690
Mark to Market Unrealized Gain/Loss		(1,866,690	)
Total net deferred tax assets (liabilities)	$	-

The provision for income taxes varies from the maximum federal statutory rate of 21% for the year ended December 31, 2024, as follows:

Years Ended December 31,	2024
Income tax expense (benefit) at federal statutory rate	$	(3,939,998	)
Change in tax status		(954,402	)
Effect of state income taxes		-
Non-deductible Permanent Items		1,935
2023 Return to Provision Adjustment		128
Change in valuation allowance		4,892,337
Total	$	-

The Fund’s accounting policy related to income tax penalties and interest assessments is to accrue for these costs and record a charge to income tax expenses during the period that the Fund takes an uncertain tax position through resolution with the taxing authorities or expiration of the applicable statute of limitations.

All of the Fund’s federal and state tax returns for 2021 through 2024 remain open to examination. We believe that there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within twelve months of the reporting date.