Beam Therapeutics Inc. Income Taxes Disclosure

14. Income taxes

The Company's operations are all domestic. As further described in Note 2, Summary of significant accounting policies, the Company has elected to prospectively adopt the guidance in ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures or ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (in thousands):

During the year ended December 31, 2025, the Company paid no income taxes. For the year ended December 31, 2025, the Company did not record a current tax provision and recorded a current tax provision of less than $0.1 million and $1.4 million of income tax expense for the years ended December 31, 2024 and 2023, respectively, which reflects that Company generated taxable income that was not fully offset by the use of net operating loss carryforwards and tax credits. Management has evaluated the positive and negative evidence bearing upon the realizability of the Company’s deferred tax assets and has determined that it is not more likely than not that the Company will recognize the benefits of the deferred tax assets. As a result, the Company has recorded a full valuation allowance at December 31, 2025 and 2024. The valuation allowance increased by $17.1 million and $108.9 million for the years ended December 31, 2025 and 2024, respectively.

Additionally, Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, limit a corporation’s ability to utilize tax attributes to the extent the corporation experiences an “ownership change,” generally defined as a greater than 50 percentage point change in ownership, measured by value, among 5% or greater shareholders over a rolling three-year testing period. To the extent a corporation experiences an ownership change, utilization of pre-ownership change tax attributes (e.g., net operating losses and general business tax credits) to offset post-ownership change taxable income or taxes, is subject to an annual limitation, generally calculated as the pre-ownership change equity value of the corporation, subject to certain prescribed adjustments, multiplied by the long-term tax exempt rate published monthly by the Internal Revenue Service. The Company completed a Section 382 study as of December 31, 2024, and determined that no historical ownership changes occurred since December 2021. The Company has not completed an analysis through December 31, 2025. To the extent there was a change in control during 2025, the Company's attributes could be subject to limitation. The Company may experience ownership changes in the future as a result of shifts in stock ownership.

As of December 31, 2025 and 2024, the Company had $511.7 million of federal net operating loss carryforwards compared to $181.5 million as of December 31, 2024. Additionally, as of December 31, 2025, the Company had $71.9 million of federal and $36.4 million of Massachusetts tax credits that expire starting in 2043 and 2038, respectively. As of December 31, 2024, the Company had $61.7 million of federal and $32.7 million of Massachusetts tax credits that expire starting in 2043 and 2038.

As of December 31, 2025, and 2024, the Company had no uncertain tax positions. The Company recognizes both interest and penalties associated with unrecognized tax benefits as a component of income tax expense. The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception.

The Company filed income tax returns in the United States and the Commonwealth of Massachusetts in all tax years since inception. Tax years beginning in 2022 remain open to examination in these jurisdictions, as carryforward attributes generated in past years may be adjusted in a future period.