Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 331

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 331
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 Distilling Holding Company, Inc.
Notes to Consolidated Financial Statements NOTE 10 — INCOME TAXES (cont.)

At December 31, 2023 and 2022, the Company has federal
net operating loss carryforwards of $ and $ respectively, which have an indefinite carryforward period. Under Sections
382 and 383 of the Code, substantial changes in our ownership may limit the amount of net operating loss and research that could be used
annually in the future to offset taxable income. The tax benefits related to future utilization of federal net operating loss carryforwards,
credit carryovers, and other deferred tax assets may be limited or lost if the cumulative changes in ownership exceeds % within any
three-year period. The Company has not completed a formal Section 382/383 analysis under the Code regarding the limitation of net operating
loss and tax credit carryforwards. If a change in ownership were to have occurred, the annual limitation may result in a reduction of
available tax attributes in a given tax year.

The Company files income tax returns in the U.S.
federal jurisdiction and various state jurisdictions. Due to its operating loss carry forward, the U.S. federal statute of limitations
remains open for 2018 and onward. The Company has no ongoing or recently closed income tax examinations. The Company recognizes tax benefits
from an uncertain position only if it is more likely than not that the position is sustainable, based on its technical merits. Interest
and penalties related to uncertain tax positions are classified as income tax expense.

|                                   |     | For the Years Ended 
        December 31, |        |    |     |      |        |    |
|                                   |     |                2023 |        |    |     | 2022 |        |    |
| Effective Tax Rate Reconciliation |     |                     |        |    |     |      |        |    |
| Statutory Rate                    |     |                     |   21.0 | %  |     |      |   21.0 | %  |
| State Taxes                       |     |                     |   0.72 | %  |     |      |   1.84 | %  |
| Permanent Items                   |     |                     | (13.26 | )% |     |      |   3.43 | %  |
| Change in Valuation Allowance     |     |                     |  (7.83 | )% |     |      | (26.34 | )