Kura Oncology, Inc. Income Taxes Disclosure

13. Income Taxes

For the year ended December 31, 2025, we recorded no current federal tax provision, and state tax provisions of $0.3 million. For the year ended December 31, 2024, we recorded a current federal and state tax provision of $1.8 million and $0.3 million, respectively. For the year ended December 31, 2023, we did not record a provision for income taxes due to a loss and a full valuation against our deferred taxes.

As of December 31, 2025, we had federal net operating loss, or NOL, carryforwards of $310.5 million, that can be carried forward indefinitely. As of December 31, 2025, we had state loss carryforwards of $667.6 million, which will begin to expire in 2034, unless previously utilized. We also have federal and state research and development credit carryforwards of $82.1 million and $12.0 million, respectively. The federal research and development credits will begin to expire in 2040, unless previously utilized. Of the state research and development credits, $3.9 million will carryforward indefinitely and approximately $8.0 million will begin to expire in 2030, unless previously utilized.

We file tax returns as prescribed by the tax laws of the jurisdictions in which we operate. Our tax years since inception are subject to examination by the federal and state jurisdictions due to the carryforward of unutilized net operating losses and research and development credits. We have not been, nor are we currently, under examination by the federal or any state tax authority.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use existing deferred tax assets. Based on the weight of the evidence, including our limited existence and losses since inception, management has determined that it is more likely than not that the deferred tax assets will not be realized and therefore has recorded a full valuation allowance against the deferred taxes. The valuation allowance increased by $85.0 million from December 31, 2024.

Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or IRC, annual use of our NOL or research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. We completed a study to assess whether an ownership change, as defined by IRC Section 382, has occurred from our formation through December 31, 2025. We determined that an ownership change occurred in 2015, but concluded the annual utilization limitation would be sufficient to utilize our pre-ownership change NOLs and research and development credits prior to expiration. Therefore we do not expect any material limitations to the utilization of NOL’s or research and development credits. Future ownership changes may limit our ability to utilize remaining tax attributes. Any carryforwards that will expire prior to utilization as a result of such additional limitations will be removed from deferred tax assets, with a corresponding reduction of the valuation allowance.

In accordance with authoritative guidance, the impact of an uncertain income tax position is recognized at the largest amount that is “more likely than not” to be sustained upon audit by the relevant taxing authority. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained.

Our practice is to recognize interest and penalties related to income tax matters in income tax expense. There was no accrued interest or penalties included on the balance sheets as of December 31, 2025, 2024, or 2023, and we have not recognized interest and penalties on the statements of operations and comprehensive loss for the years ended December 31, 2025, 2024 or 2023.

We do not expect that there will be a significant change in the unrecognized tax benefits over the next 12 months. Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact our effective tax rate.