Core Scientific, Inc./tx

10. INCOME TAXES

Current income tax expense represents the amount expected to be reported on the Company’s income tax returns, and deferred

tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined

based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that

will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the

amount considered likely to be realized.

The income tax expense and effective income tax rate for thethree months ended March 31, 2026 and 2025 were as follows:

For thethree months ended March 31, 2026, the Company recorded$0.6 million ofincome taxexpense which consisted of

discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is(0.2)%,

compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance(17.5)%, state taxes 0.7%,

non-deductible loss on warrant and contingent liabilities(3.2)% and other items(1.2)%. The Company has a full valuation allowance

on its net deferred tax asset as evidence indicates that it is not more likely than not expected to realize such asset.

For thethree months ended March 31, 2025, the Company recorded$0.2 million of income taxexpense which consisted of

discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is 0.0%,

compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance 2.8%, state taxes(0.1)%,

non-deductible loss on warrant and contingent liabilities(24.6)% and other items 0.9%. The Company has a full valuation allowance

on its net deferred tax asset as evidence indicates that it is not more likely than not expected to realize such asset.