Celcuity Inc. Income Taxes Disclosure

12. Income Taxes

 

No income tax benefit was recorded during the years ended December 31, 2025 and 2024, due to net losses and recognition of a valuation allowance. The following table, which reflects the Company’s retrospective adoption of ASU 2023-09, presents a reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate, including the amount (in thousands):

 Schedule of Effective Income Tax Rate Reconciliation

		Amount				%				Amount				%
		Year Ended December 31,
		2025								2024
		Amount				%				Amount				%
Tax benefit at statutory rate		$	(37,179	)			21.0	%		$	(23,474	)			21.0	%
State income tax benefit, net of federal tax effect			(14	)			—				(3	)			—
Federal change in valuation allowance on deferred tax assets			38,249				(21.6	)			23,797				(21.3	)
Federal research and development credits			(1,358	)			0.8				(982	)			0.9
Prior year adjustments			(343	)			0.2				(3	)			—
Non-deductible items			645				(0.4	)			665				(0.6	)
Income tax expense (benefit)		$	—				—	%		$	—				—	%

 

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing a series of corporate tax changes in the U.S., including 100% bonus depreciation on qualified property and full expensing of domestic research and development expenditures. The impacts of OBBBA are reflected in our results of operations during the year ended December 31, 2025. OBBBA did not have a material impact on the Company’s effective income tax rate and its net deferred tax assets as the Company maintains a full valuation allowance.

 

 

Deferred tax assets (liabilities) 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 Company’s deferred tax assets relate primarily to its net operating loss carryforwards and other balance sheet basis differences. In accordance with ASC 740, Income Taxes, the Company recorded a valuation allowance to fully offset the net deferred tax assets as of December 31, 2025 and 2024, because it is more likely than not that the Company will not realize future benefits associated with these deferred tax assets. The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets (liabilities) were (in thousands):

 Schedule of Deferred Tax Assets and Liabilities

		2025				2024
		As of December 31,
		2025				2024
Gross deferred tax assets (liabilities):
Accrued expenses		$	253			$	459
Stock-based compensation			6,056				2,861
Property and equipment			463				420
Right-of-use assets			(11	)			(45	)
Lease liabilities			12				48
Section 174 expenditures			48,070				30,133
Start-up expenditures			21,955				12,998
Net operating losses and tax credits			23,483				13,340
Deferred tax assets before valuation allowance			100,281				60,214
Valuation allowance			(100,281	)			(60,214	)
Net deferred tax assets		$	—			$	—

 

As of December 31, 2025, the Company had federal and state net operating loss carryforwards of $83.3 million and $4.8 million, respectively. The federal and state net operating loss carryforwards for 2017 will begin to expire during the year ending December 31, 2037. The federal net operating loss carryforwards starting in 2018 have no expiration. These deferred tax assets were subject to a full valuation allowance as of December 31, 2025 and 2024.

 

As of December 31, 2025, the Company had federal and state research and development tax credit carryforwards resulting in deferred tax assets of $4.3 million and $2.0 million, respectively. The federal and state credit carryforwards will begin to expire during the years ending December 31, 2038 and December 31, 2033, respectively. These deferred tax assets were subject to a full valuation allowance as of December 31, 2025 and 2024.

 

Under the provisions of Section 382 of the Internal Revenue Code of 1986, certain substantial changes in the Company’s ownership, including a sale of the Company, or significant changes in ownership due to sales of equity, may limit in the future the amount of net operating loss carryforwards available to offset future taxable income.

 

The Company recognizes uncertain tax positions in accordance with ASC 740 on the basis of evaluating whether it is more-likely-than not that the tax positions will be sustained upon examination by tax authorities. For those tax positions that meet the more-likely-than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement. As of December 31, 2025 and 2024, the Company had no significant uncertain tax positions. There are no unrecognized tax benefits included on the balance sheets that would, if recognized, impact the effective tax rate. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months.

 

The Company is no longer subject to U.S. federal income tax examinations for years before 2022, although carryforward attributes that were generated before 2022 may still be adjusted upon examination if used in a future period. State income tax statutes vary by jurisdiction. In most states in which the Company operates, the statute of limitations remains open for four years, and accordingly, the Company is generally no longer subject to state income tax examinations for years before 2021.

 

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of general and administrative expenses. As of December 31, 2025, the Company had no accrued interest or penalties and no amounts were recognized in the statements of operations.

 

During the years ended December 31, 2025 and 2024, the Company made state tax payments which were deemed immaterial.