Company: BWMN
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001628280-25-039001
Chunk: 18

Company: Bowman Consulting Group Ltd.
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 18
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. Valuation allowances are provided when it is more likely than not that a deferred tax asset is not realizable or recoverable in the future. As of June 30, 2025, no valuation allowances are required, and all deferred tax assets are realizable.The Company assesses uncertain tax positions to determine whether income tax positions will more likely than not be sustained upon examination by the Internal Revenue Service or other taxing authorities. If the Company cannot reach a more-likely-than-not determination, no benefit is recorded. If the Company determines that the tax position is more likely than not to be sustained, the Company records the largest amount of benefit that is more likely than not to be realized when the tax position is settled. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and required taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code Section 174. The capitalized expenses were to be amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, we have established a $60.4 million uncertain tax position related to capitalized and amortizable research and development ("R&D") costs as of the six-month period ended June 30, 2025. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law in the U.S. The OBBBA contains a broad range of tax reform provisions affecting businesses including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. The Company is evaluating the future impact of these tax law changes on its financial statements.The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in income in the period that includes the enactment date. The Company’s effective tax rate for the six months ended June 30, 2025 and June 30, 2024 was 33.7% and 56.0%, respectively. The change in the Company’s effective tax rate is predominantly due to certain non-recurring discrete events in addition to changes in the estimated annual effective tax rate, as discussed below. The most prominent factors impacting the estimated annual effective tax rate include an increase in the projected limitation of the