| 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 deferred income tax benefit or expense was recorded for the three-month periods ended September 30, 2023, and 2022
or the nine-month periods ended September 30, 2023 and 2022, for federal or state income taxes. 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
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
Federal income tax benefit at statutory rate $ (1,255,601 ) $ (845,722 ) $ (3,486,052 ) $ (2,733,779 )
State income tax benefit (330,642 ) (222,707 ) (917,994 ) (719,896 )
Permanent differences 6,154 3,157 14,457 11,920
Change in valuation allowance 2,218,188 1,132,895 5,089,875 3,572,189
Prior period adjustment to actual (620,630 ) - (620,630 ) -
Other (17,469 ) (67,623 ) (79,656 ) (130,434 )
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 $ 10,988,821 5,580,595 The
Company files income tax returns in the U.S. federal and various state jurisdictions. The Company is 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, 2023 December 31, 2022
Deferred income tax assets:
Current:
Research and development costs $ 723,577 $ 343,087
Other 59,126 59,018
Non-current:
Net operating losses 5,862,906 3,381,215
Research and development costs 3,645,038 1,762,716
Research and development tax credit 756,122 -
Unvested stock options 405,739 204,380
Patents 99,118 92,417
Right-of-use assets 45,265 63,563
Gross deferred income tax assets 11,596,891 5,906,396
Less: valuation allowance (10,988,821 ) (5,580,595 )
Net deferred income tax asset 608,070 325,801
Deferred income tax liabilities:
Current:
Accrual to cash - (11,228 )
Non-current
Property and equipment (608,070 ) (314,573 )
Gross deferred income tax liabilities (608,070 ) (325,801 )
Net deferred tax asset (liability) $ - $ - | (13) 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 U.S. Federal income tax rate for the respective years ended as follows: Schedule of Effective Income Tax Rate Reconciliation
December 31, 2022 December 31, 2021
Federal income tax benefit at statutory rate $ (3,712,008 ) $ (563,519 )
State income tax benefit (977,496 ) (148,393 )
Permanent differences 11,935 44,804
Change in valuation allowance 4,733,324 713,701
Prior period adjustment to
actual
Other (55,755 ) (46,593 )
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 $ 5,580,595
and $ 847,269 ,
respectively, at December 31, 2022 and 2021, which was recorded as a component of income tax expense on the accompanying consolidated
statements of operations and other comprehensive loss. 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
December 31, 2022 December 31, 2021
Deferred income tax assets:
Current:
Research and development costs $ 343,087 $ -
Other 59,018 4,050
Non-current:
Net operating losses 3,381,215 1,201,974
Research and development costs 1,762,716 -
Research
and development tax credit
Unvested stock options 204,380 11,835
Patents 92,417 90,480
Right-of-use assets 63,563 49,606
Gross deferred income tax assets 5,906,396 1,357,945
Less: valuation allowance (5,580,595 ) (847,269 )
Net deferred income tax asset 325,801 510,676
Deferred income tax liabilities:
Current:
Accrual to cash (11,228 ) (105,075 )
Non-current
Property and equipment (314,573 ) (405,601 )
Gross deferred income tax liabilities (325,801 ) (510,676 )
Net deferred tax asset (liability) $ - $ - |
