ClearPoint Neuro, Inc. Income Taxes Disclosure

13. Income Taxes

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Generally, the ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. Based on all relevant factors, a valuation allowance of $64.2 million has been established against deferred tax assets as of December 31, 2025, as management determined that it is more likely than not that sufficient taxable income will not be generated to realize those temporary differences.

The net deferred tax liability of $0.4 million as of December 31, 2025 relates to the acquisition of IRRAS, primarily related to book intangibles (with finite useful lives for book purposes and carryover tax basis) partially offset by tax net operating losses. As of December 31, 2024, the Company had no material net deferred tax liability and maintained a full valuation allowance against its net deferred income tax assets due to uncertainties surrounding their realization in future periods. Due to the timing of the acquisition late in 2025, any partial release of the valuation allowance would be reflected in the year ended December 31, 2025, and future periods as evidence of realizability evolves. The Company is subject to multiple state minimum income tax expenses for the years ended December 31, 2025 and 2024. If it is determined in the future that it is more likely than not that any deferred income tax assets are realizable, the valuation allowance will be reduced by the estimated net realizable amounts.

At December 31, 2025, the Company had net operating loss carryforwards of approximately $258.2 million and $163.1 million available to reduce future taxable income, if any, for federal and state income tax purposes, respectively. The federal net operating loss carryforwards begin expiring in 2026, and the state net operating loss carryforwards will begin expiring in 2028. It is possible that the Company will not generate taxable income in time to use these net operating loss carryforwards before their expiration. In addition, under Section 382 of the Internal Revenue Code of 1986 (the “Code”), as amended, if a corporation undergoes an “ownership change” (as defined in the Code), the corporation’s ability to use its pre-change tax attributes to offset its post-change income may be limited. In general, an “ownership change” occurs if there is a cumulative change in a “loss corporation’s” (as defined in the Code) ownership by 5% shareholders that exceeds 50 percentage points over a rolling three-year period.

Management has evaluated the effect of guidance provided by GAAP regarding accounting for uncertainty in income taxes and determined the Company has no uncertain tax positions that could have a significant impact on its consolidated financial statements. The Company’s federal income tax return for 2022 and subsequent years remain open for examination.