Company: SLNH
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024045
Chunk: 10

Company: Soluna Holdings, Inc
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 10
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6%
and 9.3%,
respectively. The projected annual effective tax rate is less than the Federal statutory rate of 21%,
primarily due to the change in the valuation allowance, as well as changes to estimated taxable income for 2025 and permanent
differences. For the three months ended June 30, 2025 and 2024, there was a deferred income tax benefit of $615
thousand and $714
thousand respectively, offset by a $7
thousand and $65
thousand current tax expense for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025
and 2024, there was a deferred income tax benefit of approximately $1.1
million and $1.3
million, respectively, offset by a $12
thousand and $63
thousand current tax expense for the six months ended June 30, 2025 and 2024, respectively.

    13

In
connection with the strategic contract pipeline acquired in the acquisition as further discussed in Note 5, ASC 740-10-25-51 requires
the recognition of a deferred tax impact of acquiring an asset in a transaction that is not a business combination when the amount paid
exceeds the tax basis on the acquisition date. As such, the Company is required to adjust the value of the strategic contract pipeline
by approximately $10.9 million at inception date, which was recorded as a deferred tax liability, and this amount will be amortized over
the life of the asset. For the three and six months ended June 30, 2025 and 2024, the Company amortized $547 thousand and $1.1 million, respectively.

The
Company provides for recognition of deferred tax assets if the realization of such assets is more likely than not to occur in accordance
with accounting standards that address income taxes. Significant management judgment is required in determining the period in which the
reversal of a valuation allowance should occur. The Company has considered all available evidence, both positive and negative, such as
historical levels of income and future forecasts of taxable income amongst other items, in determining its valuation allowance. In addition,
the Company’s assessment requires us 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