Company: WKSP
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000850
Chunk: 352

Company: Worksport Ltd
Filing Date: 2025-03-27
Form: 10-K
Item: Item 7
Chunk 352
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 of deferred tax assets is dependent, in part,
upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers
projected future taxable income, tax planning strategies and carryback opportunities in making its assessment of the recoverability of
tax assets. Net
operating loss carryforwards of approximately $43,399,000 may be offset against future taxable income. No tax benefit from these losses have
been reported in the December 31, 2024 consolidated financial statements since the potential tax benefit is offset by a valuation allowance
of the same amount.

    56

Worksport
Ltd.

Notes
to the Consolidated Financial Statements

December
31, 2024 and 2023

8.
Income Taxes (continued)

Due
to change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes
are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future
years.

The
Company complies with the provisions of FASB ASC 740 in accounting for its uncertain tax positions. ASC 740 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740,
the Company may 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 Company has determined that
the Company has no significant uncertain tax positions requiring recognition under ASC 740.

The
Company does not expect the amount of unrecognized tax benefits to materially change within the next twelve months.

The Company is subject to income taxes in the U.S. and
in various states and foreign jurisdictions. Tax regulations with each jurisdiction are subject to the interpretation of the related tax
laws and regulations and require the application of significant judgment. The Company is no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for tax years ending before
December 31, 2020 in the U.S. The Company is no longer subject to non-U.S. income tax examinations by tax authorities for tax years ending
before December 31, 2014.

9.
Financial Instruments and Fair Value

Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction