Company: XAIR
Filing Date: 2025-06-20
Form Type: 10-K
Source: 0001641172-25-015750
Chunk: 2596

Company: Beyond Air, Inc.
Filing Date: 2025-06-20
Form: 10-K
Item: Item 9C
Chunk 2596
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 Israeli, Irish and Cypriot tax purposes,
respectively. The U.S. federal NOL carryforwards of approximately $1.4
million, which were generated prior to March
2018 expire starting in 2035 through 2037. The NOL of approximately $158.5
million can be carried forward indefinitely but limited to offset 80%
of taxable income. The entire NOL for Israel, Ireland and Australia can be carried forward indefinitely. The Company also has state
NOL carryforwards in the amount of approximately $87.7
million expiring
during the years from 2036 to 2043. The Tax Cuts and Jobs Act of 2017 (“TCJA”) has modified the Internal Revenue
Code (“IRC”) 174 expenses related to research and development for tax years beginning after December 31, 2021. Under the
TCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years
for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and
development costs in accordance with IRC 174 resulted in a gross deferred tax asset of $34.0
million.

The Company also has
R&D tax credits of $2.9
million expiring
during the years from 2038 to 2042. The Company has not, as yet, conducted a study of R&D credit carryforwards. This
study may result in an adjustment to the Company’s R&D credit carryforwards. We assessed our uncertain tax positions and
determined that a 25%
reserve on our federal research and development credit is appropriate and in line with industry standards. As
of March 31, 2025, the total amount of unrecognized tax benefits was $0.7
million, exclusive of interest and penalties. A full valuation allowance has been provided against the Company’s R&D credits and, if an adjustment is
required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated
balance sheets and the consolidated statements of operations and comprehensive loss if an adjustment were required. No estimated interest
or penalties related to unrecognized tax benefits have been recorded as of March 31, 2025.

Pursuant to Section 382 of the Internal Revenue Code,
changes in the Company’s ownership may limit the amount of its NOL carryforwards that could be utilized