CPS TECHNOLOGIES CORP/DE/ Income Taxes Disclosure

(12) Income Taxes

 

Components of income tax expense (benefit) for each year are as follows:

 

		2025				2024
Current:
Federal		$	-			$	-
State			456				456
Current income tax provision (benefit):			456				456
Deferred:
Federal			205,439				(727,390	)
State			56,389				(231,566	)
Deferred income tax provision (benefit), net			261,828				(958,956	)
Total		$	262,284			$	(958,500	)

 

Deferred tax assets as of December 27, 2025 and December 28, 2024 are as follows:

 

		December 27, 2025				December 28, 2024
Deferred Tax Assets:
Net operating loss carryforwards		$	719,586			$	766,023
Stock compensation			119,130				117,453
Credit carryforwards			887,910				899,441
Inventory			188,334				141,615
Accrued liabilities			6,359				6,468
Depreciation			104,575				120,452
Capitalized R&D, net			237,044				474,088
Other			3,916				3,142
Net deferred tax assets		$	2,266,854			$	2,528,682

 

Net operating loss carryforwards are the result of federal net operating losses as of 12/272025 and 12/28/2024 are $2,624,214 and 2,805,819, respectively. Under current tax law, these federal losses were incurred subsequent to 2018 and can be carried forward indefinitely. State net operating loss carryforwards expire in 2044.

 

A summary of the change in the deferred tax asset is as follows:

 

		2025				2024
Gross deferred tax balance at beginning of year		$	2,528,682			$	1,569,726
Deferred tax (provision) benefit			(261,828	)			958,956
Balance at end of year, net		$	2,266,854			$	2,528,682

 

Income tax expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 21 percent and the Massachusetts statutory income tax rate (net of federal benefit) of 6.32 percent

to pretax income as a result of the following:

 

		2025					2024
			Amount		Rate			Amount			Rate
Tax at statutory rate		$	143,354		21.00%		$	(857,216	)		21.00%
State tax, net of federal benefit			56,749		8.31%			(231,204	)		5.66%
Other			62,181		21.00%			129,920			19.14%
Total		$	262,284		34.82%		$	(958,500	)		23.48%

 

A valuation allowance against deferred tax assets is required to be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. The Company concluded that it is “more likely than not” that the Company will be able to fully utilize the deferred tax asset.

 

The Company’s income tax filings are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations for the years 2021 through 2024.