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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

Note 16 — Income Taxes

 

Income tax (benefit) expense for respective periods noted is as follows:

 

   2023   2022 
   Years Ended December 31, 
   2023   2022 
Current          
Federal, State and Local  $—   $— 
Deferred          
Federal   (9,281)   (12,703)
State and Local   (6,897)   1,209 
Current and Deferred tax (benefit) expense   (16,178)   (11,494)
Less: Valuation allowance reserve   16,178    11,494 
Income tax (benefit) expense  $—   $— 

 

The reconciliation of the federal statutory income tax rate to the effective income tax rate for the respective period noted is as follows:

 

   2023   2022 
   Years Ended December 31, 
   2023   2022 
U.S. federal statutory rate   21.0%   21.0%
U.S. state and local income taxes, net of federal benefit   

6.4

%   7.2%
Permanent differences   (1.3)%   0.6%
Tax credits   1.5%   0.5%
Revaluation of state deferred taxes   —%   (8.8)%
Federal deferred true-up   (0.7)%   —%
State deferred true-up   3.8%   —%
Valuation allowance   (30.7)%   (20.5)%
Effective tax rate   —%   —%

 

The tax effects of temporary differences which give rise to the net deferred tax assets for the respective period noted is as follows:

 

 

   2023   2022 
   Years Ended December 31, 
   2023   2022 
Deferred Tax Assets          
Net operating loss  $29,059   $16,015 
Debt issue costs   55    — 
Stock-based compensation expense   7,984    6,920 
Accrued expenses   111    80 
Depreciation & amortization   790    240 
Research and development expenditures   3,109    2,442 
Research and development tax credit carryforwards   1,062    295 
Deferred tax assets  $42,170   $25,992 
           
Deferred Tax Liabilities          
Depreciation   —    — 
Deferred Tax Liabilities  $—   $— 
           
Deferred tax assets, net of deferred tax liabilities   42,170    25,992 
Less: valuation allowance   (42,170)   (25,992)
Deferred tax assets, net after valuation allowance  $—   $— 

 

 

Note 16 — Income Taxes - continued

 

Deferred tax assets and deferred tax liabilities resulting from temporary differences are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of the change in the tax rate is recognized as income or expense in the period the change in tax rate is enacted.

 

As required by FASB ASC Topic 740, Income Taxes, (“ASC 740”), a “more-likely-than-not” criterion is applied when assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income, or with respect to a deferred tax asset for tax credit carryforward, to reduce future tax expense. A valuation allowance is established, when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not, the full or partial amount of the net deferred tax asset will not be realized. Accordingly, the Company evaluated the positive and negative evidence bearing upon the estimated realizability of the net deferred tax assets, and based on the Company’s history of operating losses, concluded it is more-likely-than-not the deferred tax assets will not be realized, and therefore recognized a valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities, as of December 31, 2023 and 2022.

 

Lucid Diagnostics has federal and state net operating loss (“NOL”) carryforwards, available to reduce future taxable income, if any, as of December 31, 2023 and 2022, as follows: federal NOL carryforward of approximately $103.5 million and $65.1 million, respectively, with such federal NOL carryforward not having a statutory expiration date; and state NOL carryforward of approximately $103.5 million and $65.1 million, respectively, with such state NOL carryforward having statutory expiration dates commencing in 2037. The Company has not yet conducted a formal analysis and the NOL carryforward may be subject-to limitation under U.S. Internal Revenue Code (“IRC”) Section 382 (provided there was a greater than 50% ownership change, as computed under such IRC Section 382).

 

As discussed herein, on October 14, 2021, Lucid Diagnostics completed its initial public offering (“IPO”) of its common stock. While PAVmed Inc. holds a majority-interest equity ownership and has a controlling financial interest, its ownership interest was reduced from 81.8477% before the IPO to 79.9796% after the IPO. Accordingly, Lucid Diagnostics is included in the PAVmed consolidated income tax returns through October 13, 2021, and effective October 14, 2021, Lucid Diagnostics will file its income tax returns on a stand-alone legal entity basis. The Lucid Diagnostics stand-alone legal entity estimated income tax provision was computed on an assumed separate income tax return for the periods presented through October 13, 2021, wherein, the estimated income tax provision of Lucid Diagnostics is computed as if its income tax returns were filed by Lucid Diagnostics on a stand-alone legal entity basis. Notwithstanding the absence of a formal tax sharing agreement between PAVmed and Lucid Diagnostics, the Lucid Diagnostics stand-alone legal entity current tax expense and /or tax refund, if any, would be settled with PAVmed(as opposed with the respective tax authority) through October 13, 2021. The deferred tax asset and /or deferred tax liability; a valuation allowance on the deferred tax asset, net; and /or an uncertain tax position, if any; each as discussed above, is determined based on Lucid Diagnostics stand-alone legal entity assumed filing of separate income tax returns.

 

The Company files income tax returns in the United States in federal and applicable state and local jurisdictions. The Company’s tax filings for the years 2018 and thereafter each remain subject to examination by taxing authorities. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. The Company has not recognized any penalties or interest related to its income tax provision.

 

In August 2022, the U.S. Congress passed the Inflation Reduction Act, which included a corporate minimum tax on book earnings of 15%, an excise tax on corporate share repurchases of 1%, and certain climate change and energy tax credit incentives. The adoption of a corporate minimum tax of 15% is not expected to impact Lucid’s effective tax rate. The excise tax of 1% on corporate share buybacks will not have an impact on the Company’s effective tax rate.