XML 38 R11.htm IDEA: XBRL DOCUMENT
v3.22.2

Income Taxes | 3 Months Ended | 12 Months Ended
--- | --- | ---
Mar. 31, 2022 | Dec. 31, 2021
Income Tax Disclosure [Abstract] |  |
Income Tax | Note 3: Income Taxes The Company’s subsidiary, ProKidney-US, is treated as a C corporation, and therefore a provision for federal and state taxes has been recorded. The Company’s income tax provision for the three months ended March 31, 2022 and 2021 were $1,010,000 and $6,000, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, available taxes in the carryback periods, projected future taxable income and tax planning strategies in making this assessment. The difference between the Company’s effective tax rate of (1.5)% for the three months ended March 31, 2022 and the U.S. statutory rate of 21% is primarily attributable to the Company and ProKidney-KY being treated as partnerships for income tax purposes. For tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act of 2017 (the “TCJA”) requires specified research and development expenses to be capitalized and amortized ratably over a five-year period. The adoption of this provision of the TCJA is the primary driver of income tax expense recognized during the three months ended March 31, 2022. There are no net unrecognized tax benefits as of March 31, 2022 which, if recognized, would affect our effective tax rate. We expect none of the gross unrecognized tax benefits will decrease within the next year. There have been no significant changes in the Company’s uncertain tax positions during the three months ended March 31, 2022. | Note 3: Income Taxes The Company’s subsidiary, ProKidney-US, is treated as a C corporation, and therefore a provision for federal and state taxes has been recorded. The provision for income tax expense consisted of the following for the year ended December 31, 2021 and 2020 (in thousands):
|  | December 31, 2021 |  |  | December 31, 2020 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 72 |  |  | $ | (242 | )
State |  |  | (34 | ) |  |  | 10 |
Total current income tax expense (benefit) |  |  | 38 |  |  |  | (232 | )
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |
Total deferred income tax expense |  |  | — |  |  |  | — |
Income tax expense (benefit) |  | $ | 38 |  |  | $ | (232 | )
The difference between the statutory rate for federal income tax and the effective income tax rate was as follows:
|  | December 31, 2021 |  |  | December 31, 2020 |
Current: |  |  |  |  |  |  |  |
Income taxes at statutory rate |  |  | 21.0 | % |  |  | 21.0 | %
State taxes, net of federal benefit |  |  | — |  |  |  | — |
LLC flow-through structure |  |  | (21.4 | ) |  |  | (21.5 | )
Federal Credits |  |  | 1.8 |  |  |  | 2.3 |
Provision to return adjustment |  |  | — |  |  |  | 0.2 |
Change in valuation allowance |  |  | (1.3 | ) |  |  | (1.1 | )
Other |  |  | (0.2 | ) |  |  | — |
Effective income tax rate |  |  | (0.1 | )% |  |  | 0.9 | %
Components of the Company’s deferred tax assets and liabilities included in the consolidated balance sheet consisted of the following (in thousands):
|  | December 31, 2021 |  |  | December 31, 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued bonus |  | $ | 376 |  |  | $ | 243 |
Fixed assets |  |  | — |  |  |  | 108 |
Federal credit carryforwards |  |  | 939 |  |  |  | 331 |
Leases |  |  | 28 |  |  |  | — |
Start-up costs |  |  | 39 |  |  |  | 48 |
Deferred tax assets before valuation allowance |  |  | 1,382 |  |  |  | 730 |
Valuation allowance |  |  | 1,237 |  |  |  | 560 |
Total deferred tax assets |  |  | 145 |  |  |  | 170 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets |  |  | 90 |  |  |  | 148 |
Fixed assets |  |  | 47 |  |  |  | — |
Prepaid expenses |  |  | 8 |  |  |  | 22 |
Total deferred tax liabilities |  |  | 145 |  |  |  | 170 |
Net deferred tax asset |  | $ | — |  |  | $ | — |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, available taxes in the carryback periods, projected future taxable income and tax planning strategies in making this assessment. Accordingly, the Company has provided a valuation allowance of $1,237,000 and $560,000 respectively for December 31, 2021 and 2020, to offset the net deferred tax assets. The Company has $1,118,000 in Research Credit Carryforwards that begin to expire in 2040. A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2021 and 2020 consisted of the following (in thousands):
|  | December 31, 2021 |  |  | December 31, 2020 |
Unrecognized tax benefits (gross): |  |  |  |  |  |  |  |
Benefits at the beginning of the year |  | $ | — |  |  | $ | — |
Increase related to prior year tax positions |  |  | 94 |  |  |  | — |
Decrease related to prior year tax positions |  |  | — |  |  |  | — |
Increase related to current year tax positions |  |  | 86 |  |  |  | — |
Benefits at the end of the year |  | $ | 180 |  |  | $ | — |
There are no net unrecognized tax benefits as of December 31, 2021 which, if recognized, would affect our effective tax rate. We expect none of the gross unrecognized tax benefits will decrease within the next year. In March 2020, the World Health Organization declared coronavirus (COVID-19) a global pandemic. This contagious disease outbreak, which continued to spread, and the related adverse public health developments, have adversely affected work forces, economies and financial markets globally. As a result, governments around the world have enacted legislation to provide aid and stimulate economies. In the U.S., The Coronavirus, Aid, Relief and Economics Security Act (“CARES Act”), was enacted on March 27, 2020, The Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, and the American Rescue Plan Act of 2021 was enacted on March 11, 2021. All of these acts included both income tax and non-income tax provisions to assist companies. No provisions in these acts had a material impact on the income tax provision or any other area of the Company’s financial statements. Tax years 2018 through 2021 remain subject to examination by federal and state authorities.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration