Artiva Biotherapeutics, Inc. Income Taxes Disclosure
11. Income Taxes
The Company reported pre-tax book losses in the United States of $83.9 million and $65.4 million, for the years ended December 31, 2025 and 2024, respectively.
A reconciliation of the U.S. federal statutory income tax rate to the effective tax rate is as follows (in thousands):
|
|
YEAR ENDED DECEMBER 31, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
Expected tax benefit at statutory rate |
|
$ |
(17,612 |
) |
|
|
21.00 |
% |
|
$ |
(13,730 |
) |
|
|
21.00 |
% |
(1) |
|
|
(292 |
) |
|
|
0.35 |
% |
|
|
(246 |
) |
|
|
0.38 |
% |
Tax credits - Research and development |
|
|
(3,224 |
) |
|
|
3.84 |
% |
|
|
(2,614 |
) |
|
|
4.00 |
% |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Executive compensation expense |
|
|
456 |
|
|
|
-0.54 |
% |
|
|
1,626 |
|
|
|
-2.49 |
% |
Change in fair value of SAFEs |
|
|
— |
|
|
|
0.00 |
% |
|
|
755 |
|
|
|
-1.16 |
% |
Stock-based compensation expense |
|
|
1,194 |
|
|
|
-1.43 |
% |
|
|
(1,004 |
) |
|
|
1.55 |
% |
Other |
|
|
(30 |
) |
|
|
0.04 |
% |
|
|
11 |
|
|
|
-0.02 |
% |
Other provision adjustments |
|
|
9 |
|
|
|
-0.01 |
% |
|
|
71 |
|
|
|
-0.11 |
% |
Change in valuation allowance |
|
|
18,401 |
|
|
|
-21.94 |
% |
|
|
14,231 |
|
|
|
-21.77 |
% |
Change in unrecognized tax benefits |
|
|
1,098 |
|
|
|
-1.31 |
% |
|
|
900 |
|
|
|
-1.38 |
% |
Provision for income taxes |
|
$ |
— |
|
|
|
0.00 |
% |
|
$ |
— |
|
|
|
0.00 |
% |
(1) 50% or more of our state tax provision relates to the California taxing jurisdiction.
Due to losses, the Company did not pay any federal and state income taxes in 2025 or 2024.
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The principal components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands):
|
|
YEAR ENDED DECEMBER 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net operating loss carryforwards |
|
$ |
54,930 |
|
|
$ |
29,693 |
|
Capitalized research and development |
|
|
16,741 |
|
|
|
21,731 |
|
Operating lease liabilities |
|
|
3,050 |
|
|
|
3,970 |
|
Intangible assets |
|
|
875 |
|
|
|
959 |
|
Research and development credits |
|
|
11,801 |
|
|
|
8,423 |
|
Other, net |
|
|
3,879 |
|
|
|
3,410 |
|
Total deferred tax assets |
|
$ |
91,276 |
|
|
$ |
68,186 |
|
Valuation allowance |
|
|
(87,643 |
) |
|
|
(63,115 |
) |
Deferred tax assets, net of valuation allowance |
|
$ |
3,633 |
|
|
$ |
5,071 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Fixed assets |
|
|
(688 |
) |
|
|
(1,211 |
) |
Operating lease assets |
|
|
(2,945 |
) |
|
|
(3,860 |
) |
Total deferred tax liabilities |
|
$ |
(3,633 |
) |
|
$ |
(5,071 |
) |
Net deferred tax assets / (liabilities) |
|
$ |
— |
|
|
$ |
— |
|
The Company increased its valuation allowance by $24.5 million for the year ended December 31, 2025 in order to maintain a full valuation allowance against its deferred tax assets. The Company recorded a full valuation allowance against its net deferred tax assets as of December 31, 2025 due to the uncertainty surrounding the realization of such assets. The Company has determined it more likely than not that the deferred tax assets are not realizable due to the Company's historical loss position. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support a reversal of the allowance.
The Company has net operating loss (NOL) carryforwards for federal and state income tax purposes of $195.0 million and $217.7 million, respectively, as of December 31, 2025. All of the federal net operating loss
carryforwards are not subject to expiration but are limited to 80% of the taxable income in the year the carryforward is used. The state net operating loss carryforwards, if not utilized, will start to expire in 2039.
As of December 31, 2025, the Company has federal and state research and development credit carryforwards of $10.6 million and $6.8 million, respectively. The federal credits will start to expire in 2041 and the state credits are available indefinitely.
Pursuant to Sections 382 and 383 of the Code, and corresponding provisions of state law, annual use of the Company’s federal and state NOLs and research and development credit carryforwards may be limited in the event of a cumulative ownership change of more than 50 percentage points (by value) within a rolling three-year period. The Company has not completed an ownership change analysis pursuant to Section 382. If ownership changes have occurred or occurs in the future, the amount of remaining tax attribute carryforwards available to offset taxable income and income tax expense in future years may be restricted or eliminated. If eliminated, the related asset would be removed from deferred tax assets with a corresponding reduction in the valuation allowance.
The Company files income tax returns in the United States federal jurisdiction and California. The Company is not currently under examination by any federal, state or local tax authority and all tax years from inception remain open to United States federal and state examination to the extent of the utilization of net operating loss and credit carryovers.
As of December 31, 2025, the Company had unrecognized tax benefits of $6.2 million related primarily to the federal and state research and development credits as a result of no formal research credit study performed.
A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows (in thousands):
|
|
YEAR ENDED DECEMBER 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Unrecognized Tax Benefits - Beginning |
|
$ |
4,995 |
|
|
$ |
3,999 |
|
Increases related to current year positions |
|
|
1,211 |
|
|
|
1,012 |
|
Increases (decreases) related to prior year positions |
|
|
— |
|
|
|
(16 |
) |
Unrecognized Tax Benefits - Ending |
|
$ |
6,206 |
|
|
$ |
4,995 |
|
Due to the full valuation allowance, future recognition of previously unrecognized tax benefits will not impact the Company’s effective tax rate. The Company recognizes interest expense and penalties related to the above unrecognized tax benefits within income tax expense (benefit). Management determined that no accrual for interest and penalties was required as of December 31, 2025.
On July 4, 2025, the One Big Beautiful Bill Act (the OBBBA) was enacted in the United States. The OBBBA includes corporate provisions that make 100% bonus depreciation permanent, allow for the expensing of domestic research costs, and modifies the business interest expense limitation calculation. These changes were incorporated into our income tax provision for the tax year ended December 31, 2025, resulting in no impact to our fiscal year 2025 effective tax rate and net deferred tax assets as we maintain a full valuation allowance.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 24, 2025 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.