Immuneering CorpIMRX
Immuneering Corp Income Taxes Disclosure
Income Taxes
A reconciliation of the effect of applying the federal statutory rate to the net loss and the effective income tax rate are as follows:
| 2024 | 2023 | ||||||||||
| Statutory federal income tax rate | 21.0 | % | 21.0 | % | |||||||
| State tax, net of federal benefit | 1.9 | % | (3.2) | % | |||||||
| Permanent differences | (0.9) | % | (0.9) | % | |||||||
| Federal research and development credits | 6.4 | % | 4.1 | % | |||||||
| State research and development credits | — | % | — | % | |||||||
| Uncertain tax positions | (0.6) | % | (0.4) | % | |||||||
| Other differences | (2.0) | % | 0.1 | % | |||||||
| Change in valuation allowance | (25.8) | % | (20.7) | % | |||||||
| Effective income tax rate | — | % | — | % | |||||||
As of December 31, 2024 and 2023, the components and tax effects of each type of item that gave rise to the net deferred tax assets were as follows:
| 2024 | 2023 | ||||||||||
| Deferred tax assets: | |||||||||||
| Stock-based compensation expense | $ | 855,125 | $ | 1,387,849 | |||||||
| Research expenses | 22,286,355 | 16,282,709 | |||||||||
| Unrealized losses | — | 172 | |||||||||
| Accrued Bonus | 668,229 | 602,121 | |||||||||
| R&D credit carryforward | 10,228,771 | 6,295,756 | |||||||||
| NOL carryforward | 25,300,681 | 19,095,948 | |||||||||
| Gross deferred tax assets | 59,339,161 | 43,664,555 | |||||||||
| Valuation allowance | (58,994,707) | (43,274,909) | |||||||||
| Net deferred tax assets | 344,454 | 389,646 | |||||||||
| Net deferred tax liabilities: | |||||||||||
| Prepaid expenses deducted for tax | (139,736) | (173,497) | |||||||||
| Right-of-use | (108,976) | (103,034) | |||||||||
| Tax depreciation in excess of book | (95,742) | (113,115) | |||||||||
| Total deferred tax liabilities | (344,454) | (389,646) | |||||||||
| Net deferred taxes | $ | — | $ | — | |||||||
Federal net operating losses (“NOL”) generated in tax years ended after December 31, 2017 are limited to 80% of taxable income, only carried forward and carried forward indefinitely under the Internal Revenue Code of 1986, as amended (the “IRC”). There was no income tax expense or benefit in 2024. The Company has provided a valuation allowance for the full amount of the net deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period. At December 31, 2024, the Company has federal and state NOLs of $106,908,178 and $47,418,182, respectively, all generated after the tax year ended December 31, 2017. At December 31, 2024, the Company has federal and state research and development credit carryforwards of $8,279,555 and $2,032,358, respectively, that start to expire beginning in 2027.
As the Company has not yet achieved profitable operations, management believes the tax benefits as of December 31, 2024 did not satisfy the realization criteria set forth in ASC Topic 740, Income Taxes and, therefore, has recorded a full valuation allowance for the entire deferred tax asset. The valuation allowance increased in 2024 by $15,719,798 due to the increase in the deferred tax assets by approximately the same amount, primarily due to NOL and research and development expenses.
Utilization of the U.S. net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the IRC, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position.
As of December 31, 2024 and December 31, 2023, the Company had uncertain tax positions of $1,136,528 and $699,527, respectively. The Company has classified the unrecognized tax benefits as reductions of its tax carryforwards. The
Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2024 and 2023.
As of December 31, 2024 and December 31, 2023, unrecognized tax benefits were as follows:
| 2024 | 2023 | ||||||||||
| Beginning balance | $ | 699,527 | $ | 541,067 | |||||||
| Increase due to current year tax position | 437,001 | 158,460 | |||||||||
| Ending balance | $ | 1,136,528 | $ | 699,527 | |||||||
The Company files tax returns in the United States including without limitation California, New York, Florida, New Jersey and Massachusetts. All tax years from 2017 to 2023 remain open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (“IRS”) or other authorities if they have or will be used in a future period. The Company is not to its knowledge currently under examination by the IRS or in any other jurisdictions for any tax years.
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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.