BridgeBio Oncology Therapeutics, Inc. Income Taxes Disclosure

11. Income Taxes

The Company accounts for income taxes in accordance with authoritative guidance, which requires the use of the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based upon the difference between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.

The Company’s net losses for the years ended December 31, 2025 and 2024 have been derived in the United States. No current or deferred income taxes were recorded, and no material income tax payments were made during the years ended December 31, 2025 and 2024.

The following table presents a reconciliation of the statutory federal rate and our effective tax rate (in thousands, except percentages):

Deferred income taxes reflect the net tax 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 following table presents the significant components of the Company’s deferred tax assets and liabilities for the periods presented (in thousands):

As of December 31, 2025, the Company has federal net operating loss carryforwards of approximately $148.8 million, to reduce future taxable income. The federal net operating losses generated prior to 2018 amounting to $4.9 million will begin to expire in 2036, losses generated after 2018 amounting to $143.9 million will carry over indefinitely and would be subject to an 80% taxable income limitation in the year utilized. As of December 31, 2025, the Company has state net operating loss carryforwards of approximately $129.8 million, to reduce future taxable income. State net operating losses will generally begin to expire in 2036.

As of December 31, 2025, the Company has federal research and development credit carryforwards of approximately $6.7 million, to offset future tax liability. The credit carryforwards will begin to expire in 2039. As of December 31, 2025, the Company has state research and development credit carryforwards of approximately $1.9 million, to offset future tax liability. The credit carryforwards are not subject to expiration.

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses and forecast of future losses, the Company provided a full valuation allowance against the Company’s deferred tax assets resulting from the tax loss and credits carried forward.

Utilization of the Company’s net operating loss and credit carryforwards may be subject to a substantial annual limitation due to an ownership change limitations as provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. In the event that the Company had a change of ownership, utilization of the net operating loss and tax credit carryforwards may be restricted.