|12 Months Ended|
Dec. 31, 2021
|Income Tax Disclosure [Abstract]|
Note 8 - Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2021 and 2020 are as follows:
The Company has recorded a valuation allowance of $62.6 million and $56.2 million against its deferred tax assets at December 31, 2021 and 2020 respectively, because management determined that it is not more-likely-than not that those assets will be realized.
For federal income tax purposes, the Company has $163.0 million of unused net operating losses (“NOLs”) at December 31, 2021 available for carry forward to future years. NOLs of $120.8 million generated prior to 2018 will begin to expire if unused in 2022. NOLs generated in 2018 and later years of $42.2 million have an indefinite life, but will be limited to 80% of their value if used in a tax year ending after January 1, 2022.
For state income tax purposes, the Company has $87.9 million of unused NOLs at December 31, 2021 available for carry forward to future years. These NOLs will begin to expire in 2034 if unused.
The Company has federal research and development tax credits of $2.9 million at December 31, 2021 which will begin to expire in 2034 if unused and orphan drug credits of $11.6 million which will begin to expire in 2028 if unused.
Federal and state tax laws impose limitations on the utilization of net operating losses and credit carryforwards in the event of an ownership change for tax purposes, as defined in Section 382 of the Internal Revenue Code. Accordingly, the Company’s ability to utilize these carryforwards may be limited as a result of an ownership change which may have already happened or may happen in the future. Such an ownership change could result in a limitation in the use of the net operating losses in future years and possibly a reduction of the net operating losses available.
The difference between the income tax provision and the amount that would result if the U.S. Federal statutory rates were applied to pre-tax losses for the year ended December 31, 2021 and 2020 are as follows:
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef