Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 257

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 19
Chunk 257
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─────────────────────────────────────────────────────────────────────────────
  PRC statutory rates                                                                   25.0        25.0        25.0  
  Preferential tax rates                                                               ( 0.4       ( 0.4       ( 2.9  
  R& D credits                                                                           0.3         0.2         1.5  
  Change in valuation allowance and others                                            ( 24.8      ( 24.8      ( 19.2  
  Effective tax rate                                                                     0.1         0.0         4.4  

Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. The significant components of the deferred tax assets are as follows:

                                       As of December 31,                                              
                                       2024                                     2023                   
 ───────────────────────────────────────────────────────────────────────────────────────────────────────
  Deferred tax assets:                                                                                 
  Provision for credit losses          $                         1,483,285      $           1,268,962  
  Depreciation and amortization                                    207,204                    185,676  
  Net operating loss carryforward                                2,751,701                  2,496,584  
  Valuation allowance                                          ( 3,464,740                ( 2,932,049  
  Deferred tax assets, net             $                           977,450      $           1,019,173  

F-35

X3 HOLDINGS CO., LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 - Taxes(continued)

As of December 31, 2024, the
Group has approximately $15.4million net operating loss (“ NOL”) carryforwards with expirations by 2029. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences
become deductible. Management considers the cumulative earnings and projected future taxable income in making this assessment. Recovery
of substantially all of the group’s deferred tax assets is dependent upon the generation of future income, exclusive of reversing
taxable temporary differences. Based upon the level of historical taxable income and projections for future taxable income over the periods
in which the deferred tax assets are recoverable, management provided $3,464,740and $2,932,049valuation allowance against the