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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Taxes [Abstract]  
Income Taxes

Note 16. Income Taxes 

 

The Company recorded no income tax expense for the nine months ended September 30, 2025 and 2024 because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives.

 

As of September 30, 2025, and December 31, 2024, the Company provided a full valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized.

 

The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025. The Company has evaluated whether OBBBA has a material impact on its 2025 unaudited condensed consolidated financial statements. The only provision of OBBBA that impacts the Company’s income tax accounting under ASC740 is the new IRC. Sec. 174A, which permanently allows taxpayers to fully expense domestic research or experimental (R&E) expenditures paid or incurred in taxable years beginning after December 31, 2024. The requirement to capitalize foreign Sec. 174 expenses over 15 years has not changed. On August 28, 2025, the IRS released procedural guidance (Rev. Proc. 2025-28) for implementing Section 174A and related elections for domestic research or experimental expenditures. Transition rules provide taxpayers with options to account for any remaining unamortized domestic R&E expenditures paid or incurred in taxable years beginning after December 31, 2021, and before January 1, 2025. Taxpayers may continue to amortize such unamortized amounts over the remaining five-year period; alternatively, they may elect to deduct any remaining unamortized domestic R&E expenditures either entirely in the first tax year beginning after December 31, 2024, or ratably over two taxable years (e.g., 2025 or ratably in 2025 and 2026). The Company plans to elect to deduct the remaining unamortized costs entirely in 2025. As of December 31, 2024, the Company has approximately $415,000 of remaining unamortized domestic R&D expenditures eligible for immediate deduction, representing approximately $119,000 of its December 31, 2024 gross Deferred Tax Assets. The impact of deducting these costs is reclassifying approximately $119,000 from Capitalized Sec. 174 to Net Operating Loss Carryforward, with zero net impact on the Company’s gross deferred tax assets or effective tax rate.