CRISPR Therapeutics AG Income Taxes Disclosure
14. Income Taxes
The Company is subject to U.S. federal and various state corporate income taxes as well as taxes in foreign jurisdictions for the foreign parent and where foreign subsidiaries have been established.
Net loss before taxes
For the years ended December 31, 2025, 2024 and 2023, the net loss before income taxes consist of the following (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
32,527 |
|
|
$ |
41,232 |
|
|
$ |
30,357 |
|
Foreign |
|
|
(610,492 |
) |
|
|
(403,897 |
) |
|
|
(181,079 |
) |
Total |
|
$ |
(577,965 |
) |
|
$ |
(362,665 |
) |
|
$ |
(150,722 |
) |
The provision for income taxes consist of the following (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current income taxes: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
(1,658 |
) |
|
$ |
(2,592 |
) |
|
$ |
(2,318 |
) |
State |
|
|
(1,061 |
) |
|
|
(1,479 |
) |
|
|
(994 |
) |
Foreign |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total current income taxes |
|
|
(2,719 |
) |
|
|
(4,071 |
) |
|
|
(3,312 |
) |
Deferred income taxes: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
(933 |
) |
|
$ |
492 |
|
|
$ |
424 |
|
State |
|
|
18 |
|
|
|
(8 |
) |
|
|
— |
|
Foreign |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total deferred income taxes |
|
|
(915 |
) |
|
|
484 |
|
|
|
424 |
|
Total income tax provision |
|
$ |
(3,634 |
) |
|
$ |
(3,587 |
) |
|
$ |
(2,888 |
) |
A reconciliation of income tax expense computed at the statutory corporate income tax rate to the effective income tax rate after the adoption of ASU 2023-09 for the year ended December 31, 2025 is as follows (amounts in thousands):
|
|
Year Ended December 31, |
|||||||
|
|
2025 |
|
|
|||||
|
|
Amount |
|
|
Percent |
|
|
||
Statutory federal tax rate |
|
|
44,966 |
|
|
|
(7.8 |
)% |
|
State and local income tax, net of federal income tax effect1 |
|
|
— |
|
|
|
0.0 |
% |
|
Foreign Tax Effects |
|
|
|
|
|
|
|
||
United States |
|
|
|
|
|
|
|
||
Statutory rate difference between the U.S. and Switzerland |
|
|
(4,300 |
) |
|
|
0.7 |
% |
|
State and local income tax, net of federal income tax effect2 |
|
|
(1,937 |
) |
|
|
0.3 |
% |
|
Research and development tax credits |
|
|
7,775 |
|
|
|
(1.3 |
)% |
|
Change in valuation allowances |
|
|
1,957 |
|
|
|
(0.4 |
)% |
|
Non-taxable or non-deductible items |
|
|
(3,467 |
) |
|
|
0.6 |
% |
|
Other |
|
|
(85 |
) |
|
|
0.0 |
% |
|
Other Foreign Jurisdictions |
|
|
(3 |
) |
|
|
0.0 |
% |
|
Changes in valuation allowances |
|
|
(39,082 |
) |
|
|
6.8 |
% |
|
Non-taxable or non-deductible items |
|
|
|
|
|
|
|
||
Equity issuance for in-process research and development |
|
|
(5,543 |
) |
|
|
1.0 |
% |
|
Other |
|
|
(910 |
) |
|
|
0.2 |
% |
|
Changes in unrecognized tax benefits |
|
|
(1,046 |
) |
|
|
0.2 |
% |
|
Other adjustments |
|
|
(1,959 |
) |
|
|
0.3 |
% |
|
Effective income tax rate |
|
|
(3,634 |
) |
|
|
0.6 |
% |
|
(1) State taxes in the Swiss Canton of Zug made up the majority (greater than 50 percent) of the tax effect in this category.
(2) State taxes in Massachusetts made up the majority (greater than 50 percent) of the tax effect in this category.
A reconciliation of income tax expense computed at the statutory corporate income tax rate to the effective income tax rate prior to the adoption of ASU 2023-09 for the years ended December 31, 2024 and 2023 is as follows:
|
|
Years Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Income tax expense at statutory rate |
|
|
11.9 |
% |
|
|
11.9 |
% |
State income tax, net of federal benefit |
|
|
1.1 |
% |
|
|
2.3 |
% |
Non-deductible expenses |
|
|
0.0 |
% |
|
|
(0.2 |
)% |
Foreign rate differential |
|
|
(1.0 |
)% |
|
|
(2.1 |
)% |
Statutory to U.S. GAAP permanent differences |
|
|
0.0 |
% |
|
|
0.0 |
% |
Stock-based compensation |
|
|
(0.4 |
)% |
|
|
(4.0 |
%) |
Impact of deferred rate change |
|
|
(0.1 |
)% |
|
|
0.1 |
% |
Research credits |
|
|
2.7 |
% |
|
|
8.2 |
% |
Change in valuation allowance |
|
|
(15.2 |
)% |
|
|
(17.2 |
)% |
Other Rate Items |
|
|
0.0 |
% |
|
|
(0.9 |
)% |
Effective income tax rate |
|
|
(1.0 |
%) |
|
|
(1.9 |
%) |
The federal statutory rate reflects the Switzerland mixed company service rate.
Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following (in thousands):
|
|
Years Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Net operating loss carryforwards |
|
$ |
241,462 |
|
|
$ |
178,061 |
|
Accruals and reserves |
|
|
3,393 |
|
|
|
4,479 |
|
Operating lease liabilities |
|
|
56,594 |
|
|
|
60,570 |
|
Other deferred tax assets |
|
|
12,337 |
|
|
|
17,809 |
|
Stock-based compensation |
|
|
18,801 |
|
|
|
20,553 |
|
Research credit |
|
|
77,901 |
|
|
|
74,012 |
|
Total deferred tax assets |
|
|
410,488 |
|
|
|
355,484 |
|
Less valuation allowance |
|
|
(345,395 |
) |
|
|
(282,739 |
) |
Net deferred tax assets |
|
|
65,093 |
|
|
|
72,745 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Depreciation |
|
|
(30,128 |
) |
|
|
(34,078 |
) |
Operating lease assets |
|
|
(36,058 |
) |
|
|
(38,845 |
) |
Other deferred tax liabilities |
|
|
(37 |
) |
|
|
(36 |
) |
Total deferred tax liabilities |
|
|
(66,223 |
) |
|
|
(72,959 |
) |
Long term deferred taxes |
|
$ |
(1,130 |
) |
|
$ |
(214 |
) |
The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of worldwide operating losses, the Company has concluded that it is more-likely-than-not that the benefit of its U.S. and non-U.S. deferred tax assets will not be realized. Accordingly, as of December 31, 2025 and 2024, the Company has provided a full valuation allowance against its net deferred tax assets in Switzerland and the United Kingdom. The Company has also provided a valuation allowance against the U.S. deferred tax assets that cannot be realized by existing deferred tax liabilities based upon when they are scheduled to reverse. The valuation allowance increased by $62.7 million during 2025, which is primarily attributable to increase in net operating loss carryforwards as a result of current year net loss.
As of December 31, 2025, the Company had no available U.S. federal net operating loss carryforwards. As of December 31, 2025, the Company had available U.S. state net operating loss carryforward of $9.4 million that begin to expire in 2045. As of December 31, 2025, the Company had available non-U.S. net operating loss carryforwards of $4,037.2 million of which $2,017.4 million relate to Switzerland, $2,017.4 million relate to the Canton of Zug, and $2.4 million relate to the Company’s wholly-owned subsidiary in the United Kingdom. The net operating losses generated in Switzerland and the Canton of Zug begin to expire in 2027 and the net operating losses generated in the United Kingdom can be carried forward indefinitely.
As of December 31, 2025, the Company had U.S. domestic federal research and development credit carryforwards of $31.1 million that begin to expire in 2041 for federal purposes, which are net of uncertain tax positions of $24.4 million. As of December 31, 2025, the Company had U.S. domestic federal orphan drug credit carryforwards of $27.0 million which begin to expire in 2040 for federal purposes, which are net of uncertain tax positions of $11.5 million. As of December 31, 2025, the Company had U.S. domestic state research and development credit carryforwards of $25.1 million which begin to expire in 2035, which are net of uncertain tax positions of $13.0 million.
ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement by prescribing the minimum recognition threshold and measurement of a tax position taken or expected to be taken in a tax return.
As of December 31, 2025, the Company had gross unrecognized tax benefits of $50.7 million of which $46.7 million would favorably impact the effective tax rate if recognized. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025 and 2024, interest and penalties recognized in the Company's financial statements related to uncertain tax positions were not material. As of December 31, 2023, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the Company’s consolidated statements of operations and comprehensive loss.
The aggregate changes in gross unrecognized tax benefits were as follows (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Balance at beginning of year |
|
$ |
49,959 |
|
|
$ |
44,148 |
|
|
$ |
34,536 |
|
Increases for tax positions taken during current period |
|
|
2,900 |
|
|
|
5,777 |
|
|
|
9,703 |
|
Increases for tax positions taken in prior periods |
|
|
51 |
|
|
|
34 |
|
|
|
— |
|
Decreases for tax positions taken during current period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Decreases for tax positions taken in prior periods |
|
|
(2,201 |
) |
|
|
— |
|
|
|
(91 |
) |
Balance at end of year |
|
$ |
50,709 |
|
|
$ |
49,959 |
|
|
$ |
44,148 |
|
The Company files income tax returns in the U.S. federal, state, and certain non-U.S. jurisdictions. The Company is subject to U.S. federal, Massachusetts, California and non-U.S. income tax examinations by authorities for tax years ending after December 31, 2021. Research credits generated in prior tax years that are closed for examination may still be adjusted upon future examination if they have or will be used in a future period. The Company is subject to income tax examinations by authorities in its non-U.S. jurisdictions for all years.
A summary of income taxes paid by jurisdiction, net of refunds, after the adoption of ASU 2023-09 for the year ended December 31, 2025 is as follows (in thousands):
|
|
Years Ended December 31, |
|
|
|
|
2025 |
|
|
Foreign |
|
|
|
|
U.S. Federal |
|
$ |
1,720 |
|
Massachusetts |
|
|
1,264 |
|
Other |
|
|
1 |
|
Total |
|
|
2,985 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 11, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 12, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Mar 10, 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.