Caribou Biosciences, Inc.CRBU
Caribou Biosciences, Inc. Income Taxes Disclosure
Income Taxes
We reported pre-tax book losses in the United States of $148.7 million and $149.1 million for the years ended December 31, 2025, and 2024, respectively.
For the years ended December 31, 2025, and 2024, our benefit from income taxes consisted of the following (in thousands):
| Years | 2025 | 2024 | ||||||||||||
| Current income taxes | ||||||||||||||
| Federal | $ | — | $ | — | ||||||||||
| State | 1 | 1 | ||||||||||||
| Total current income tax expense | 1 | 1 | ||||||||||||
| Deferred income taxes: | ||||||||||||||
| Federal | (385) | 67 | ||||||||||||
| State | (166) | (77) | ||||||||||||
| Total deferred income tax (benefit) expense | (551) | (10) | ||||||||||||
| Total income tax (benefit) expense | $ | (550) | $ | (9) | ||||||||||
We adopted ASU 2023-09 on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax rate to our actual global effective tax rate for the year ended December 31, 2025 (in thousands):
| Amount | Rate | |||||||||||||
U.S. federal statutory tax rate | $ | (31,221) | 21.0 | % | ||||||||||
State & local income taxes, net of federal income tax effect* | (693) | 0.5 | % | |||||||||||
| Tax credits | ||||||||||||||
Federal research and development credits | (7,570) | 5.1 | % | |||||||||||
Changes in prior year credits | 58 | — | % | |||||||||||
Changes in valuation allowances | 34,619 | (23.3) | % | |||||||||||
| Changes in unrecognized tax benefits | 2,029 | (1.4) | % | |||||||||||
Other adjustments | ||||||||||||||
| Other non-deductible expenses | 2,228 | (1.5) | % | |||||||||||
Effective tax rate | $ | (550) | 0.4 | % | ||||||||||
*State taxes in California represent the majority (greater than 50%) of the tax effect in this category.
The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the year ended December 31, 2024:
| Years | 2024 | |||||||
Federal income tax benefit at statutory rate | (21 | %) | ||||||
| State taxes, net of federal benefit | (8 | %) | ||||||
| Change in valuation allowance, federal | 27 | % | ||||||
| Change in valuation allowance, state | 7 | % | ||||||
| Stock-based compensation | 1 | % | ||||||
Research and development tax credits, net of reserves | (5 | %) | ||||||
Return to provision, federal | (2 | %) | ||||||
Change in rates | 1 | % | ||||||
| Effective income tax rate | — | % | ||||||
Our effective tax rate differs from the U.S. federal statutory rate primarily due to tax credits, state income taxes, changes in valuation allowances, and nondeductible expenses. The rate was reduced by federal and state research and development credits generated during the year and by adjustments to prior-year credit carryforwards. State income taxes, net of the federal benefit, primarily reflect an increase in the valuation allowance on certain state deferred tax assets, with only immaterial state minimum taxes recognized during the year for California, Connecticut, and Wisconsin.
Deferred income taxes reflect the net tax 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 following table presents significant components of our deferred tax assets and liabilities as of December 31, 2025, and 2024 (in thousands):
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| NOL and tax attributes | $ | 142,818 | $ | 81,619 | |||||||
| Accrued expenses and reserve | 1,684 | 1,800 | |||||||||
| Deferred revenue and expenses | 801 | 1,402 | |||||||||
| State income taxes | 7 | 7 | |||||||||
| Capitalized license and patent costs | 869 | 1,089 | |||||||||
| Capitalized research and development cost | 30,557 | 56,865 | |||||||||
| Lease liabilities | 6,571 | 6,090 | |||||||||
| Stock-based compensation | 6,639 | 5,976 | |||||||||
Investments in equity securities | 37 | — | |||||||||
Fixed assets | 1,206 | — | |||||||||
| Total deferred tax assets | 191,189 | 154,848 | |||||||||
| Valuation allowance | (186,924) | (147,313) | |||||||||
| Net deferred tax assets | 4,265 | 7,535 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Investments in equity securities | — | (2,107) | |||||||||
| Lease right of use assets | (4,265) | (4,600) | |||||||||
| Fixed assets | — | (1,376) | |||||||||
| Total deferred tax liabilities | (4,265) | (8,083) | |||||||||
| Net deferred tax assets (liabilities) | $ | — | $ | (548) | |||||||
We have evaluated the positive and negative evidence in determining the realizability of our net deferred tax assets. As of December 31, 2025, our deferred tax assets were primarily the result of historical federal and state net operating loss (“NOL”) and tax credits, capitalized research costs, stock-based compensation expense, and the net of lease right of use assets and liabilities. As of December 31, 2025, a valuation allowance of $186.9 million was recorded against our deferred tax assets. As of December 31, 2024, a valuation allowance of $147.3 million was recorded against our deferred tax assets.
As of December 31, 2025, we had federal NOL carryforwards of $381.8 million, which do not expire. As of December 31, 2025, we had state NOL carryforwards of $297.9 million, which may be available to offset future state income, and which expire at various years beginning with 2036.
As of December 31, 2025, we generated federal research and development tax credit and orphan drug tax credit carryforwards of $35.5 million, which will begin to expire in 2037. As of December 31, 2025, we had state research and development tax credit carryforwards of $13.9 million, which do not expire.
Under Section 382 of the Tax Code, the ability to utilize NOL carryforwards or other tax attributes, such as research and development tax credit and orphan drug tax credit, in any taxable year may be limited if we have experienced an “ownership change.” Generally, a Section 382 ownership change occurs if there is a cumulative increase of more than 50 percentage points in the stock ownership of one or more stockholders or groups of stockholders who own at least 5% of a corporation’s stock within a specified testing period. Similar rules may apply under state tax laws. As a result of our analysis, we believe that there have been three ownership changes under Section 382; however, none of our state NOL and research and development tax credit carryforwards is currently expected to expire unused. We may experience ownership changes as a result of future financing or other changes in our stock ownership.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Balance at the beginning of the year | $ | 8,009 | $ | 4,093 | ||||||||||
| Increases related to current year tax positions | 2,059 | 2,654 | ||||||||||||
| Increases related to prior year tax positions | 305 | 1,298 | ||||||||||||
| Decreases related to prior year tax positions | (339) | (36) | ||||||||||||
| Balance at the end of year | $ | 10,034 | $ | 8,009 | ||||||||||
We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, and 2024, we had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in our consolidated statements of operations and comprehensive loss.
We file our federal and state income tax returns with varying statutes of limitations. Our tax years from 2014 through 2025 will remain open to examination due to the carryover of the unused NOLs and tax credits. There are no ongoing examinations by taxing authorities at this time.
The following table shows the change in deferred tax valuation allowance for the periods indicated:
| 2025 | 2024 | ||||||||||
| Beginning balance, January 1 | $ | 147,313 | $ | 96,166 | |||||||
| Change charged to expense | 39,611 | 51,147 | |||||||||
| Ending balance, December 31 | $ | 186,924 | $ | 147,313 | |||||||
Previously, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminated the ability to deduct research and development expenditures in the year incurred, requiring capitalization and amortization under Section 174 of the Tax Code Section. On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OBBBA”), which includes broad tax reform provisions that extend and modify key elements of the TCJA. Notably, the new legislation now allows an option for the immediate expensing of domestic research and development expenditures, beginning with 2025. The OBBBA also includes favorable modifications to international tax provisions, including changes to the Global Intangible Low-Taxed Income regime and enhancements to the Foreign-Derived Deduction Eligible Income deduction that will become effective for taxable years beginning after December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 21, 2022 | |
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.