Gossamer Bio, Inc.GOSS

Gossamer Bio, Inc. Income Taxes Disclosure

10-KFiled Mar 13, 20255 min read
Income Taxes
The amount of net loss before taxes for the years ended December 31, 2024, 2023, and 2022 is as follows:
December 31,
202420232022
(in thousands)
U.S. loss before taxes$32,178 $134,073 $175,777 
Foreign loss before taxes23,457 45,736 53,593 
Pre-tax Loss$55,635 $179,809 $229,370 

A reconciliation of income tax expense for the years ended December 31, 2024, 2023 and 2022 is as follows:
December 31,
202420232022
(in thousands)
Current:
     Federal$886 $— $— 
     State7 8 8 
Total income tax expense$893 $8 $8 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2024, 2023 and 2022 are shown below. The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred assets. At such time as it is determined that it is more likely than not that the deferred tax asset will be realized, the valuation allowance will be reduced. The change in the valuation allowance for the year ended December 31, 2024 was an increase of $7.4 million.
December 31,
202420232022
(in thousands)
Deferred tax assets:
Net operating losses$97,940 $122,987 $128,989 
Deferred loss10,575 — — 
Capital loss20,348 — — 
Tax credits44,803 45,445 34,193 
Amortization2,646 6,919 8,487 
Stock-based compensation10,984 9,886 8,445 
Lease liability1,135 726 1,354 
Accrued compensation547 1,887 2,514 
Section 174 capitalization35,715 34,268 21,840 
Other5,076 43 37 
Total gross deferred tax assets229,769 222,161 205,859 
Deferred tax liabilities:
Other(3)— — 
Right of use asset(1,083)(660)(1,244)
Property, plant and equipment— (108)(565)
Total gross deferred tax liabilities(1,086)(768)(1,809)
Valuation allowance(228,683)(221,393)(204,050)
Net deferred tax asset$— $— $— 
As of December 31, 2024, the Company had federal and state NOL carryforwards of approximately $398.1 million and $3.3 million, respectively. The federal NOL carryforwards can be carried forward indefinitely and be available to offset up to 80% of future taxable income each year. The California NOL carryforwards begin to expire in 2036. As of December 31, 2024, the Company also has Irish NOL carryforwards of approximately $113.0 million, which can be carried forward indefinitely. In the current year, the Company removed federal and foreign NOL carryforwards of $141.0 million and $0.4 million, respectively, as a result of mergers and liquidations.
As of December 31, 2024, the Company also had orphan drug credit and federal research tax credit carryforwards of approximately $48.2 million and California research tax credits of $13.2 million. The federal research tax credit carryforwards begin to expire in 2038, and the California research tax credit carryforward does not expire and can be carried forward indefinitely until utilized. In the current year, the Company removed federal and California credit carryforwards of $9.7 million and $0.4 million, respectively, as a result of mergers.
A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows:
December 31,
202420232022
Federal statutory income tax rate21.00 %21.00 %21.00 %
Change in valuation allowance(12.38 %)(8.73 %)(20.25 %)
Research and experimentation credits3.03 %5.69 %3.39 %
Foreign rate differential(3.75 %)(2.13 %)(1.88 %)
GILTI(4.72 %)— %— %
Stock-based compensation(4.61 %)(1.44 %)(0.90 %)
Nondeductible interest(4.13 %)(1.27 %)(0.99 %)
Domestic/Foreign Restructuring Impact2.52 %(12.49 %)— %
Other1.44 %(0.62 %)(0.37 %)
Provision for income taxes(1.60 %)— %— %
The NOL carryforward may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax respectively. In general, an ownership change as defined by Sections 382 and 383, results from the transactions increasing ownership of certain stockholders or public groups in the stock of the corporation of more than 50 percentage points over a three-year period. The Company had an ownership change with the IPO in February of 2019 which resulted in no forfeiture of NOLs or credits. The Company had an additional ownership change in July of 2023, which resulted in a significant limitation on the Company's utilization of its NOLs and is expected to result in forfeiture of some or all of the federal credits. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company's effective tax rate.
The Company files income tax returns in the United States, California, Florida, Ireland, and Luxembourg. Due to the Company’s losses incurred, the Company is subject to the income tax examination by authorities since inception. The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. For the years ended December 31, 2024, 2023 and 2022 and as of December 31, 2024 and 2023, there were no accruals for interest related to unrecognized tax benefits or tax penalties.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2024, 2023, and 2022, excluding interest and penalties, is as follows:
December 31,
202420232022
(in thousands)
Balance at beginning of the year$13,654 $10,572 $7,551 
Decrease related to prior year positions(2,028)— — 
Increase related to current year positions2,293 3,082 3,021 
Balance at the end of the year$13,919 $13,654 $10,572 
Included in the balance of unrecognized tax benefits at December 31, 2024 is $13.9 million that, if recognized, would not impact the Company’s income tax benefit or effective tax rate as long as the Company's deferred tax asset remains subject to a full valuation allowance. The Company does not expect any significant increases or decreases to the Company's unrecognized tax benefits within the next 12 months.
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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.

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