Iterum Therapeutics plc Income Taxes Disclosure
During the years ended December 31, 2024, 2023 and 2022, the Company recorded no income tax benefits for the net operating losses incurred in each year due to its uncertainty of realizing a benefit from those items.
The provision for income taxes consists of the following components:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|||
Current |
|
|
|
|
|
|
|
|
|
|||
U.S. |
|
$ |
240 |
|
|
$ |
613 |
|
|
$ |
301 |
|
Ireland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total Current |
|
$ |
240 |
|
|
$ |
613 |
|
|
$ |
301 |
|
|
|
|
|
|
|
|
|
|
|
|||
Deferred |
|
|
|
|
|
|
|
|
|
|||
U.S. |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Ireland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total Deferred |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Income Tax Provision |
|
$ |
240 |
|
|
$ |
613 |
|
|
$ |
301 |
|
Income taxes have been based on the following components of income (loss) before provision for income taxes:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|||
U.S. |
|
$ |
370 |
|
|
$ |
1,743 |
|
|
$ |
(13,701 |
) |
Ireland |
|
|
(24,904 |
) |
|
|
(39,501 |
) |
|
|
(30,432 |
) |
Total |
|
$ |
(24,534 |
) |
|
$ |
(37,758 |
) |
|
$ |
(44,133 |
) |
The Irish statutory rate is reconciled to the effective tax rate as follows:
|
|
Year Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|||||||||||||||
Statutory rate |
|
|
12.50 |
% |
|
$ |
(3,067 |
) |
|
|
12.50 |
% |
|
$ |
(4,720 |
) |
|
|
12.50 |
% |
|
$ |
(5,517 |
) |
Impact of U.S. tax rate |
|
|
0.23 |
% |
|
|
(57 |
) |
|
|
0.72 |
% |
|
|
(272 |
) |
|
|
4.71 |
% |
|
|
(2,080 |
) |
Impact of valuation allowance |
|
|
(12.27 |
)% |
|
|
3,012 |
|
|
|
(14.48 |
)% |
|
|
5,466 |
|
|
|
(5.30 |
)% |
|
|
2,341 |
|
Adjustments for current tax of prior periods |
|
|
2.13 |
% |
|
|
(522 |
) |
|
|
0.14 |
% |
|
|
(52 |
) |
|
|
(4.19 |
)% |
|
|
1,851 |
|
Cancellation of share options |
|
|
0.00 |
% |
|
|
— |
|
|
|
0.00 |
% |
|
|
— |
|
|
|
(9.02 |
)% |
|
|
3,983 |
|
Fair value movements on derivative financial instruments |
|
|
(2.53 |
)% |
|
|
621 |
|
|
|
3.66 |
% |
|
|
(1,382 |
) |
|
|
1.55 |
% |
|
|
(682 |
) |
Other, net |
|
|
(1.03 |
)% |
|
|
253 |
|
|
|
(4.17 |
)% |
|
|
1,573 |
|
|
|
(0.92 |
)% |
|
|
405 |
|
Effective tax rate |
|
|
(0.98 |
)% |
|
$ |
240 |
|
|
|
(1.62 |
)% |
|
$ |
613 |
|
|
|
(0.68 |
)% |
|
$ |
301 |
|
The significant components of the Company’s deferred tax assets and liabilities are as follows:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|||
Deferred tax assets |
|
|
|
|
|
|
|
|
|
|||
Share-based compensation |
|
$ |
73 |
|
|
$ |
154 |
|
|
$ |
438 |
|
Depreciation |
|
|
1 |
|
|
|
45 |
|
|
|
42 |
|
Net operating loss carryforwards |
|
|
44,536 |
|
|
|
41,525 |
|
|
|
36,059 |
|
Other |
|
|
4 |
|
|
|
4 |
|
|
|
(11 |
) |
Valuation allowance |
|
|
(44,614 |
) |
|
|
(41,728 |
) |
|
|
(36,528 |
) |
Total deferred tax assets |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|||
Deferred tax liabilities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net deferred tax asset |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
As a company incorporated in Ireland, it is principally subject to taxation in Ireland.
The Company has net operating loss carryforwards in Ireland of approximately $44,536, $41,525 and $36,059 as of the years ended December 31, 2024, 2023 and 2022, respectively, for which a full valuation allowance has been recognized as it was determined that it is more-likely-than-not that these net deferred tax assets will not be realized. The net operating loss carryforwards do not expire, but are carried forward indefinitely. Realization of these deferred tax assets is dependent on the generation of sufficient
taxable income. If the Company demonstrates consistent profitability in the future, the evaluation of the recoverability of these deferred tax assets may change and the remaining valuation allowance may be released in part or in whole. While management expects to realize the deferred tax assets, net of valuation allowances, changes in estimates of future taxable income or in tax laws may alter this expectation.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
|
|
2024 |
|
|
2023 |
|
||
Balance at January 1 |
|
$ |
2,020 |
|
|
$ |
2,844 |
|
Decrease in tax positions |
|
|
(111 |
) |
|
|
(824 |
) |
Balance at December 31 |
|
$ |
1,909 |
|
|
$ |
2,020 |
|
The Company's federal and state income tax returns for 2021 through 2023 remain open to examination by the IRS. The Company's income tax returns in Ireland remain open to examination from 2020 to 2023. The Company is not currently subject to any audits or examination.
In August 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law in the United States. The IRA created a new corporate alternative minimum tax of 15% on adjusted financial statement income and an excise tax of 1% of the value of certain stock repurchases. The provisions of the IRA will be effective for periods beginning after December 31, 2022. The enactment of the IRA did not result in any material adjustments to the Company's income tax provisions or net deferred tax assets as of December 31, 2024.
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.