Kyverna Therapeutics, Inc. Income Taxes Disclosure
12. Income Taxes
The Company has recorded no income tax expense for the years ended December 31, 2025 and 2024. All the Company’s taxable losses were generated in the U.S.
The Company paid no income taxes for the years ended December 31, 2025 and 2024.
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate was as follows:
|
|
Year Ended December 31, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
Income tax computed at federal statutory rate |
|
|
(33,874 |
) |
|
|
21.00 |
% |
|
|
(26,770 |
) |
|
|
21.00 |
% |
State taxes, net of federal effect |
|
|
26 |
|
|
|
— |
% |
|
|
(105 |
) |
|
|
0.1 |
% |
Nontaxable or nondeductible items |
|
|
1,555 |
|
|
|
(1.0 |
)% |
|
|
1,373 |
|
|
|
(1.1 |
)% |
Tax credits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research credits |
|
|
9,212 |
|
|
|
(5.7 |
)% |
|
|
(6,760 |
) |
|
|
5.3 |
% |
Worldwide changes in unrecognized tax benefits |
|
|
(1,899 |
) |
|
|
1.2 |
% |
|
|
683 |
|
|
|
(0.5 |
)% |
Change in valuation allowance |
|
|
24,980 |
|
|
|
(15.5 |
)% |
|
|
31,579 |
|
|
|
(24.8 |
)% |
Effective income tax rate |
|
|
— |
|
|
|
— |
% |
|
|
— |
|
|
|
— |
% |
Significant components of the Company’s deferred tax assets for federal and state income taxes are as follows (in thousands):
Deferred Tax Assets:
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net operating loss carry forwards |
|
$ |
52,127 |
|
|
$ |
17,209 |
|
Capitalized research and development expenditures |
|
|
27,260 |
|
|
|
30,769 |
|
Reserves and accruals |
|
|
2,742 |
|
|
|
1,505 |
|
Lease liabilities |
|
|
1,141 |
|
|
|
2,123 |
|
Research credits |
|
|
2,986 |
|
|
|
9,950 |
|
Stock-based compensation |
|
|
1,482 |
|
|
|
963 |
|
Accrued license |
|
|
1,074 |
|
|
|
1,812 |
|
License and upfront fees |
|
|
3,684 |
|
|
|
3,080 |
|
Other |
|
|
52 |
|
|
|
57 |
|
Total gross deferred tax assets |
|
|
92,548 |
|
|
|
67,468 |
|
Less: Valuation allowance |
|
|
(91,421 |
) |
|
|
(65,593 |
) |
Total deferred tax assets |
|
$ |
1,127 |
|
|
$ |
1,875 |
|
Deferred tax liabilities |
|
|
|
|
|
|
||
Property and equipment |
|
|
(105 |
) |
|
|
— |
|
Lease right-of-use assets |
|
|
(1,022 |
) |
|
|
(1,875 |
) |
Total gross deferred tax liabilities |
|
|
(1,127 |
) |
|
|
(1,875 |
) |
Net deferred tax assets |
|
$ |
— |
|
|
$ |
— |
|
A valuation allowance is required to be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. The Company has reviewed its positive and negative evidence and has concluded that it is more likely than not that the net deferred tax assets will not be realized due to the cumulative losses incurred since inception; therefore, the Company continues to maintain a valuation allowance. The valuation allowance increased by $25.8 million and $33.8 million during the years ended December 31, 2025 and 2024, respectively.
As required under ASU No. 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the "change in valuation allowance" line of the rate reconciliation. The
following table presents a reconciliation of the total change in the valuation allowance (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Beginning balance |
|
$ |
65,593 |
|
|
$ |
31,772 |
|
Change related to continuing operations |
|
|
25,826 |
|
|
|
33,842 |
|
Change related to acquisitions |
|
|
— |
|
|
|
— |
|
Change related to other comprehensive income |
|
|
2 |
|
|
|
(21 |
) |
Ending balance |
|
$ |
91,421 |
|
|
$ |
65,593 |
|
The Company has net operating loss carryforwards for federal and state income tax purposes of approximately $245.1 million and $333.8 million, respectively, as of December 31, 2025. The federal net operating loss carryforwards are not subject to expiration but are limited to 80% of the taxable income in the year the carryforward is used. State net operating loss carryforwards, if not utilized, will expire in various amounts from 2036 through 2045.
As of December 31, 2025, the Company has federal and state research and development credit carryforwards of approximately $12.2 million and $3.6 million, respectively. The federal credits will expire in various amounts from 2041 through 2045 and the state credits can be carried forward indefinitely.
Utilization of some of the federal and state net operating loss and credit carryforwards may be subject to annual limitations due to the change in ownership provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company has performed a Section 382 study as of December 31, 2025 and expects approximately $2.0 million of federal net operating losses, $12.1 million of federal research and development credits and $1.9 million California net operating losses to expire unused due to Section 382 limitations.
Uncertain Tax Positions
A reconciliation of the beginning and ending balances of the unrecognized tax benefits during the years ended December 31, 2025 and 2024, is as follows (in thousands):
|
|
2025 |
|
|
2024 |
|
||
Beginning balance |
|
$ |
19,463 |
|
|
$ |
8,395 |
|
Increase in tax positions in prior periods |
|
|
22 |
|
|
|
711 |
|
Decrease in tax positions in prior periods |
|
|
(1,927 |
) |
|
|
— |
|
Increase in tax positions in the current period |
|
|
11,430 |
|
|
|
10,357 |
|
Ending balance |
|
$ |
28,988 |
|
|
$ |
19,463 |
|
The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized. The Company has elected to include interest and penalties as a component of tax expense. During the years ended December 31, 2025 and 2024, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits.
The Company files tax returns in the U.S., California and other various states. The Company is not currently under examination in any of these jurisdictions and all its tax years remain effectively open to examination due to net operating loss carryforwards.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
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.