Company: HFFG
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001680873-25-000006
Chunk: 90

Company: HF Foods Group Inc.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 8
Chunk 90
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 in the financial statements. Under this method, the Company determines deferred tax assets and liabilities based on the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. A valuation allowance is provided when it is more likely than not that some portion or all of the net deferred tax assets will not be realized.Based on our assessment, it is more likely than not that the deferred tax assets will be realized through future taxable income. In 2023, management established a valuation allowance of $0.7 million against certain deferred taxes attributable to the Company’s subsidiary, HFFI.  In 2024, the Company dissolved its subsidiary, HFFI, and as such, the deferred tax balances and corresponding valuation allowance associated with this entity were written off during the year ended December 31, 2024. There is no remaining valuation allowance as of December 31, 2024.The Company will continue to assess the need for a valuation allowance in the future by evaluating both positive and negative evidence that may exist.The Company records uncertain tax positions in accordance with ASC Topic 740, Income Taxes (“ASC 740”), on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. See Note 12 - Income Taxes for additional information. In 2021, the Organization for Economic Co-operation and Development (“OECD”) published the Tax Challenges Arising from the Global Anti-Base Erosion Model Rules (“Pillar Two”), also referred to as the GloBE Rules or Pillar Two.  The rules are designed to ensure large multinational enterprises (“MNEs”) pay a minimum level of tax (15%)