Jasper Therapeutics, Inc. Income Taxes Disclosure

NOTE 12. INCOME TAXES

 

During the years ended December 31, 2025 and 2024, the Company did not incur any tax expense or benefit as the Company operated with taxable losses and provided a full valuation allowance.

 

The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09:

 

		Year Ended December 31,
		2025
Tax at the federal statutory rate		$	(15,918	)			21.00	%
Nondeductible items
Stock-based compensation			1,178				(1.55	)
Change in fair value of warrant liability			(1,791	)			2.36
Other permanent differences			32				(0.05	)
Research and development credits			(1,308	)			1.73
Change in valuation allowance			17,807				(23.49	)
State taxes			—				—
Provision for income taxes		$	—				—

The following table presents a reconciliation of the income tax expense computed at the statutory federal rate and the Company’s income tax expense for the year ended December 31, 2024 (in thousands):

  

		Year Ended December 31,
		2024
Federal statutory tax rate		$	(14,966	)
State taxes			(2	)
Research and development credits			(1,492	)
Stock-based compensation			986
Other permanent differences			353
Change in valuation allowance			15,123
Provision for income taxes		$	2

 

Significant components of the Company’s net deferred tax assets (liabilities) as of December 31, 2025 and 2024 were as follows (in thousands):

 

		December 31,
		2025				2024
Deferred tax assets:
Accrued expenses and other		$	242			$	479
Intangibles			286				287
Net operating losses			48,712				31,820
Research and development credits			7,079				6,031
Stock-based compensation			1,371				1,146
Lease liability			259				382
Section 195 start-up amortization			193				211
Capitalized section 174			19,112				21,128
Other			542				340
Total deferred tax assets			77,796				61,824
Valuation allowance			(77,691	)			(61,590	)
Total net deferred tax assets			105				234
Deferred tax liabilities:
Right-of-use asset			(105	)			(206	)
Fixed assets			—				(28	)
Total deferred tax liabilities			(105	)			(234	)
Net deferred tax assets		$	—			$	—

 

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. The Company believes that, based on a number of factors such as the history of operating losses, it is more likely than not that the deferred tax assets will not be fully realized, such that a full valuation allowance has been recorded. The valuation allowance increased by $16.1 million and $15.1 million for the years ended December 31, 2025 and 2024, respectively.

The following table sets forth the Company’s federal and state net operating loss carryforwards as of December 31, 2025 (in thousands):

 

		Amount				Expiration Years
Net operating losses, Federal		$	210,421			Do not expire
Net operating losses, states primarily California		$	64,946			2038-2042
Tax credits, Federal		$	6,630			2040-2045
Tax credits, state		$	4,680			N/A

 

As of December 31, 2025, the Company had research and development credit carryforwards of approximately $2.1 million and $1.4 million available to reduce future taxable income, if any, for both federal and California state income tax purposes, respectively. The federal research and development credit carryforwards begin expiring in 2040, and California credits carryforward indefinitely.

 

Utilization of the net operating loss carryforwards and research credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code, as amended (“IRC”), and similar state provisions. Annual limitations may result in the expiration of the net operating losses and tax credit carryforwards before they are utilized. As of December 31, 2022, the Company has completed an IRC Section 382 analysis from inception through the year ended December 31, 2022. The Company experienced an ownership change on November 21, 2019 related to Series A redeemable convertible preferred stock financing. Any net operating loss generated in excess of the $2.9 million will be permanently limited for California tax purposes. The Company reduced its California net operating loss deferred tax assets balance by the permanently limited amount of $0.6 million. Net federal operating losses are not limited as they can be carried forward indefinitely. The Company experienced an additional ownership change on September 24, 2021 in connection with the business combination with Amplitude Healthcare Acquisition Corporation, a special purpose acquisition company. Any further potential ownership change will be evaluated through a section 382 study. However, the Company does not expect there are additional tax attributes that will expire unused before the expiration periods.

 

Uncertain Tax Positions

 

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

 

		Year Ended December 31,
		2025				2024
Balance at beginning of year		$	3,059			$	2,420
Additions based on tax positions related to current year			709				639
Lapse of the applicable statute of limitations			(90	)			—
Balance at end of year		$	3,678			$	3,059

  

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company did not accrue any penalties or interest during tax year 2025 and 2024.

 

The Company is subject to examination by the United States federal and state tax authorities for the tax years 2022 and later. State income tax returns are generally subject to examination for a period of four years after filing of the respective return. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state tax authorities to the extent utilized in a future period. No income tax returns are currently under examination by taxing authorities.

 

On July 4, 2025, new legislation was enacted in the United States which includes significant provisions, including, but not limited to, modifications of capitalization of research and development expenses and accelerated fixed asset depreciation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has evaluated the impact of new legislation and determined that it does not have a material impact on the Company’s consolidated financial statements.