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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

At December 31, 2024, Cardiff Oncology had federal net operating loss carryforwards (“NOLs”) of approximately $3.9 million which, if not used, will continue to expire through 2037, and federal net operating loss carryforwards of approximately $118.2 million, which do not expire. Cardiff Oncology also has California NOLs of approximately $25.0 million which, if not used, will begin to expire in 2029. Cardiff Oncology also has research and development tax credits available for federal and California purposes of approximately $2.2 million and $3.0 million, respectively. The federal research and development tax credits will begin to expire on January 31, 2025. The California research and development tax credits do not expire.

Pursuant to the Internal Revenue Code of 1986, as amended (the “Code”) Sections 382 and 383, annual use of a company’s NOL and research and development credit carryforwards may be limited if there is a cumulative change in ownership of greater than 50% within a three-year period. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. The Company completed an IRS Section 382 study through December 31, 2022, to assess the limitations on the use of its NOL carryforwards due to changes in ownership. There have been two ownership changes prior to December 31, 2022, and any changes in ownership subsequent to December 31, 2022, may result in additional limitations. If limited, the related tax asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. The Company has established a valuation allowance as the realization of such deferred tax assets has not met the more likely than not threshold requirement. Due to the existence of the valuation allowance, further changes in the Company’s unrecognized tax benefits will not impact the Company’s effective tax rate.

The provision for income taxes based on losses from continuing operations consists of the following at December 31:

 

 

Years ended December 31,

 

(in thousands)

 

2024

 

 

2023

 

Current:

 

 

 

 

 

 

State

 

$

—

 

 

$

—

 

Total current provision

 

 

—

 

 

 

—

 

Deferred:

 

 

 

 

 

 

Federal

 

 

(8,697

)

 

 

(8,300

)

State

 

 

(566

)

 

 

(789

)

Total deferred (benefit) expense

 

 

(9,263

)

 

 

(9,089

)

Valuation allowance

 

 

9,263

 

 

 

9,089

 

Total income tax provision

 

$

—

 

 

$

—

 

 

Significant components of the Company’s taxes and the rates as of December 31 are shown below:

 

 

Years ended December 31,

 

(in thousands, except percentages)

 

2024

 

 

2023

 

Tax computed at the federal statutory rate

 

$

(9,540

)

 

 

21

%

 

$

(8,703

)

 

 

21

%

State tax, net of federal tax benefit

 

 

(517

)

 

 

1

%

 

 

(645

)

 

 

2

%

Permanent items

 

 

2

 

 

 

—

%

 

 

(2

)

 

 

—

%

Stock based compensation

 

 

1,070

 

 

 

(2

)%

 

 

902

 

 

 

(2

)%

Research and development credits

 

 

(642

)

 

 

1

%

 

 

(515

)

 

 

1

%

Other

 

 

364

 

 

 

(1

)%

 

 

(126

)

 

 

—

%

Valuation allowance increase (decrease)

 

 

9,263

 

 

 

(20

)%

 

 

9,089

 

 

 

(22

)%

Provision for income taxes

 

$

—

 

 

 

—

%

 

$

—

 

 

 

—

%

 

Significant components of the Company’s deferred tax assets and liabilities from federal and state income taxes as of December 31 are shown below (in thousands):

 

 

Years ended December 31,

 

(in thousands)

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Tax loss carryforwards

 

$

27,374

 

 

$

23,441

 

Research and development credits and other tax credits

 

 

4,556

 

 

 

3,611

 

Stock-based compensation

 

 

1,252

 

 

 

1,407

 

Capitalized research and development

 

 

14,209

 

 

 

9,687

 

Operating lease liabilities

 

 

327

 

 

 

471

 

Other

 

 

967

 

 

 

929

 

Total deferred tax assets

 

 

48,685

 

 

 

39,546

 

Deferred tax liabilities:

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

(251

)

 

 

(375

)

Total deferred tax liabilities

 

 

(251

)

 

 

(375

)

Net deferred tax assets before valuation allowance

 

 

48,434

 

 

 

39,171

 

Valuation allowance

 

 

(48,434

)

 

 

(39,171

)

Net deferred tax asset

 

$

—

 

 

$

—

 

 

Since inception the Company has incurred continuing losses and expects to continue to incur losses for the foreseeable future. The Company has recorded a full valuation allowance against its net deferred tax assets as it is more likely than not they will not be realized.

Cardiff Oncology does not have any unrecognized tax benefits. Cardiff Oncology’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense, and none have been incurred to date. The Company does not anticipate a significant change in unrecognized tax benefits over the next 12 months. The Company is subject to taxation in the U.S. and California. Due to net operating losses all tax years since inception remain open to examination.