CPS TECHNOLOGIES CORP/DE/ Income Taxes Disclosure
(12) Income Taxes
Components of income tax expense (benefit) for each year are as follows:
|
2024 |
2023 |
|||||||
|
Current: |
||||||||
|
Federal |
$ | - | $ | 81,919 | ||||
|
State |
456 | 456 | ||||||
|
Current income tax provision (benefit): |
456 | 82,375 | ||||||
|
Deferred: |
||||||||
|
Federal |
(727,390 | ) | 357,507 | |||||
|
State |
(231,566 | ) | 142,203 | |||||
|
Deferred income tax provision (benefit), net |
(958,956 | ) | 499,710 | |||||
|
Total |
$ | (958,500 | ) | $ | 582,085 | |||
Deferred tax assets as of December 28, 2024 and December 30, 2023 are as follows:
|
December 28, 2024 |
December 30, 2023 |
|||||||
|
Deferred Tax Assets: |
||||||||
|
Net operating loss carryforwards |
$ | 766,023 | $ | - | ||||
|
Stock compensation |
117,453 | 209,609 | ||||||
|
Credit carryforwards |
899,441 | 865,928 | ||||||
|
Inventory |
141,615 | 84,955 | ||||||
|
Accrued liabilities |
6,468 | - | ||||||
|
Depreciation |
120,452 | 143,081 | ||||||
|
Capitalized R&D, net |
474,088 | 263,421 | ||||||
|
Other |
3,142 | 2,732 | ||||||
|
Net deferred tax assets |
$ | 2,528,682 | $ | 1,569,726 | ||||
A summary of the change in the deferred tax asset is as follows:
|
2024 |
2023 |
|||||||
|
Gross deferred tax balance at beginning of year |
$ |
1,569,726 |
$ |
2,069,436 | ||||
|
Deferred tax benefit (provision) |
958,956 | (499,710 | ) | |||||
|
Balance at end of year, net |
$ |
2,528,682 |
$ |
1,569,726 | ||||
Income tax expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 21 percent to pretax income as a result of the following:
|
2024 |
2023 |
|||||||
|
Tax at statutory rate |
$ |
(857,216 |
) |
$ | 416,663 | |||
|
State tax, net of federal benefit |
(231,204 | ) | 142,562 | |||||
|
Other |
129,920 | 22,860 | ||||||
|
Total |
$ | 958,500 | $ | 582,085 | ||||
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 2020 through 2023.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 17, 2025 | Showing above |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 12, 2018 | |
| 2016 | Mar 8, 2017 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.