| Income Taxes | (12)
Income Taxes Cingulate
Inc. is taxed as a C corporation under the Internal Revenue Code. Cingulate Inc. records deferred income taxes to reflect the impact
of temporary differences between the recorded amounts of assets and liabilities for financial reporting purposes and such amounts as
measured by tax laws and regulations. CTx is a wholly-owned disregarded entity of Cingulate Inc., and all of the activity for CTx, along
with its wholly-owned subsidiary Cingulate Works Inc., is included in the calculation of the current and deferred tax assets and liabilities
for Cingulate Inc. No Income
tax expense differed from the expected expense computed by applying the U.S. Federal income tax rate as follows: Schedule
of Effective Income Tax Rate Reconciliation
Nine Months Ended Three Months Ended
September 30, 2022 September 30, 2022
Federal income tax benefit at statutory rate $ (2,733,779 ) $ (845,722 )
State income tax benefit (719,896 ) (222,707 )
Permanent differences 11,920 3,157
Change in valuation allowance 3,685,697 1,246,403
Research and development tax credit adjustment (131,681 ) (131,681 )
Other (112,261 ) (49,450 )
Total income tax expense $ - $ - Evaluating
the need for, and amount of, a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis
of all available evidence on a jurisdiction-by-jurisdiction basis. Such judgments require the Company to interpret existing tax law and
other published guidance as applied to its circumstances. As part of this assessment, the Company considers both positive and negative
evidence about its profitability and tax situation. A valuation allowance is provided if, based on available evidence, it is more likely
than not that all or some portion of a deferred tax asset will not be realized. The Company determined that it was more likely than not
that it would not realize its deferred tax assets, based on historical levels of income and future forecasts of taxable income, among
other items. The Company recorded a valuation allowance of its net deferred tax assets totaling $ 4,532,968 847,269 The
Company files income tax returns in the U.S. federal and various state jurisdictions. The Companies are not subject to U.S. federal and
state income tax examinations by tax authorities for years before 2018. The
Company follows the provisions of FASB ASC 740, Income Taxes Schedule
of Deferred Tax Assets and Liabilities
September 30, 2022 December 31, 2021
Deferred income tax assets:
Current:
Contingent liability $ 71,550 $ -
Other - 4,050
Non-current:
Net operating losses 2,616,726 1,201,974
Research and development costs 1,694,249 -
Unvested stock options 172,313 11,835
Research and development tax credits 131,681 -
Patents 104,726 90,480
Other 69,010 49,606
Gross deferred income tax assets 4,860,255 1,357,945
Less: valuation allowance (4,532,968 ) (847,269 )
Net deferred income tax asset 327,287 510,676
Deferred income tax liabilities:
Current:
Accrual to cash (3,843 ) (105,075 )
Non-current
Property and equipment (323,444 ) (405,601 )
Gross deferred income tax liabilities (327,287 ) (510,676 )
Net deferred tax asset (liability) $ - $ - |
