IOVANCE BIOTHERAPEUTICS, INC. Income Taxes Disclosure

NOTE 14. INCOME TAXES

Loss before provision of income taxes consisted of U.S. losses of $350.2 million, $359.9 million, and $433.5 million, and foreign losses of $42.9 million, $15.1 million, and $14.0 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. The Company recorded a tax benefit of $2.1 million, $2.8 million, and $3.5 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively, which resulted in an effective tax rate of 0.53%, 0.75%, and 0.78%, respectively. The income tax benefit for the periods presented primarily relates to operations in the United Kingdom and the change in deferred tax assets and liabilities.

The significant components of the Company’s net deferred tax assets and liabilities are summarized as follows (in thousands):

​

The reconciliation of the effective income tax rate to the U.S. statutory rate is as follows (in thousands):

​

​

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 years ended December 31, 2024, and December 31, 2023:

​

​

The Company had net operating loss carryforwards (“NOLs”) for federal, state and local, and foreign income tax purposes of approximately $1.7 billion, $928.8 million, and $21.0 million, respectively, as of December 31, 2025. $142.4 million of federal NOLs will expire beginning in 2027, while $1.6 billion generated after the recently enacted tax reform will have an indefinite life under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The state NOLs will expire if unused in years 2030 through 2045. The foreign NOLs do not expire. The Company had $82.3 million of federal and $13.7 million of California research and development tax credit and other tax credit carryforwards available to offset future taxable income. The federal credits begin to expire in 2033, and the California research credits have no expiration dates.

The Company’s utilization of NOLs and tax credits is subject to an annual limitation due to ownership changes that have occurred previously or that could occur in the future as provided in Section 382 of the Internal Revenue Code (“Section 382”), as well as similar state provisions. Section 382 limits the utilization of NOLs and tax credits when there is a greater than 50% change of ownership as determined under the regulations. Since its formation, the Company has raised capital through the issuance of capital stock and various convertible instruments which, combined with the purchasing shareholders’ subsequent disposition of these shares, has resulted in multiple ownership changes as defined by Section 382, and could result in ownership change in the future upon subsequent disposition. The Company’s utilization of NOLs and Tax Credits may also be adversely affected by future changes in federal and state tax laws and regulations.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation for

taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management continues to maintain a full valuation allowance against U.S. federal and state net deferred tax assets due to the Company’s cumulative loss position and lack of sufficient positive evidence to support the realizability of its U.S. net deferred tax assets. For the years ended December 31, 2025, 2024 and 2023, the change in the valuation allowance was approximately $129.9 million, $110.7 million, and $96.4 million, respectively.

The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of NOL carry-forward or amount of tax refundable is reduced) for unrecognized tax benefits because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.

If applicable, interest costs related to the unrecognized tax benefits are required to be calculated and would be classified as income tax expenses in the consolidated statements of operations. Penalties would be recognized as a component of selling, general and administrative expenses in the consolidated statements of operations.

​

A reconciliation of the beginning and ending balances of the unrecognized tax benefits during the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):

​

​

No interest or penalties on unpaid tax were recorded during the years ended December 31, 2025, 2024, or 2023. If the balance of unrecognized tax benefits were recognized in a future period, there would be no impact to the effective tax rate due to the valuation allowance on deferred tax assets.

The Company files tax returns in U.S. federal and state jurisdictions, as well as foreign jurisdictions. The U.S. federal and U.S. state taxing authorities may choose to audit tax returns for tax years beyond the statute of limitation period due to significant tax attribute carryforwards from prior years, making adjustments only to carryforward attributes. The Company is not currently under examination by income tax authorities in federal, state, or other foreign jurisdictions.

​

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The aggregate impact of the OBBBA is immaterial as the impact to the Company’s deferred tax assets will be offset entirely by a full valuation allowance in the U.S.

​

The Company did not have any significant income taxes paid, or refunds received from any jurisdiction for the years ended December 31, 2025, 2024, or 2023.