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SEC Filings

10-K/A
BIOTIME INC filed this Form 10-K/A on 04/02/2018
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8. Income Taxes

 

U.S. Federal Income Tax Reform

 

On December 22, 2017, in response to the enactment of the 2017 Tax Act (see Note 2), the SEC staff issued SAB 118 that allows OncoCyte to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. OncoCyte is currently analyzing the 2017 Tax Act, and in certain areas, has made reasonable estimates of the effects on its financial statements and tax disclosures, including and changes to OncoCyte’s existing deferred tax balances, for the year ended December 31, 2017.

 

OncoCyte remeasured certain deferred tax assets and liabilities based on the enacted tax rate at which they are expected to reverse in the future. The estimated tax affected amount related to the remeasurement of these balances was a reduction of OncoCyte’s net deferred tax assets by $6.8 million with a corresponding decrease in the valuation allowance by the same amount, recognized as of December 31, 2017, as discussed below.

 

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. As of December 31, 2017, the federal portion of the deferred tax assets and liabilities for 2017 were re-rated from 34 percent to 21 percent pursuant to the 2017 Tax Act.

 

OncoCyte has filed standalone U.S. federal income tax returns since its inception. For California purposes, OncoCyte’s activity for 2015 and 2016 was included in BioTime’s California Combined tax return. As a result of OncoCyte’s deconsolidation from BioTime on February 17, 2017, (see Note 1), OncoCyte will file a separate California return for tax year 2017. The provision for state income taxes has been determined as if OncoCyte had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of OncoCyte in future years could vary from its historical effective tax rates depending on the future legal structure of OncoCyte and related tax elections. The deferred tax assets, including the operating loss and credit carryforwards, generated by OncoCyte, will remain with OncoCyte.

 

The primary components of the deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows (in thousands):

 

   2017   2016 
Deferred liabilities:          
Available-for-sale securities  $-   $(761)
Total deferred tax liabilities   -    (761)
           
Deferred tax assets:          
Net operating loss carryforwards   11,414    11,730 
Research and development credit carryforwards   2,141    1,765 
Patents and fixed assets   268    179 
Stock-based compensation and accrued payroll   1,260    1,041 
Valuation Allowance   (15,083)   (13,954)
Total deferred tax assets   -    761 
Net deferred tax asset (liability)  $-   $- 

 

Due to losses incurred for all periods presented, OncoCyte did not record any provision or benefit for income taxes.

 

Income taxes differed from the amounts computed by applying the U.S. federal income tax of 34% to pretax losses from operations as a result of the following:

 

   Year Ended December 31, 
   2017   2016   2015 
Computed tax benefit at federal statutory rate   34%   34%   34%
Re-rate of federal net deferred tax assets   (35)%   0%   0%
Permanent differences   (8)%   (1)%   (9)%
State tax benefit   3%   2%   15%
Research and development credits   1%   2%   2%
Other   0%   7%   3%
Adjust basis for available-for-sale-securities   11%   0%   0%
Change in valuation allowance   (6)%   (44)%   (45)%
    -%   -%   -%

 

   

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