Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 1205

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 3
Chunk 1205
---
 straight-line basis. The
Company does not recognize internally developed patents as intangible assets, however legal costs associated with defending such patents
are capitalized as long-lived assets.

Income
Taxes

The
Company is subject to income taxes in the U.S. (federal and state). As part of the process of preparing the Consolidated Financial Statements,
the Company calculates income taxes for each of the jurisdictions in which the Company operates. This involves estimating actual current
taxes due together with assessing temporary differences resulting from differing treatment for tax and accounting purposes that are recorded
as deferred tax assets and liabilities, loss carryforwards and tax credit carryforwards, for which income tax benefits are expected to
be realized in future years. A valuation allowance has been established to reduce deferred tax assets, if it is more likely than not
that all, or some portion, of such deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is
recognized in the period that includes the enactment date.

Significant
management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities, and
any valuation allowance recorded against the Company’s net deferred tax assets. The Company considers all available evidence, both
positive and negative, such as historical levels of income and future forecasts of taxable income amongst other items in determining
the Company’s valuation allowance. In addition, the Company’s assessment requires the Company to schedule future taxable
income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance, which
further requires the exercise of significant management judgment.

The
Company accounts for taxes in accordance with the asset and liability method of accounting for income taxes. Under this method, the Company
must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial
statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon
ultimate resolution. The impact of the Company’s reassessment of its tax positions for these standards did not have a material
impact on its results of operations, financial condition, or liquidity.

The
Company is currently subject to audit in various jurisdictions, and these jurisdictions may assess additional income tax liabilities
against us. Developments in an audit, litigation, or in applicable laws, regulations, administrative practices