Company: CPSH
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0001437749-25-024312
Chunk: 6

Company: CPS TECHNOLOGIES CORP/DE/
Filing Date: 2025-08-01
Form: 10-Q
Item: Part I, Item 1
Chunk 6
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 ( 1,574,599  
  Other income, net                                                             19,025                              90,851                                69,501          170,021  
  Income (loss) before income taxes                                            155,952                         ( 1,224,136                               336,079      ( 1,404,578  
  Income tax provision (benefit)                                                52,119                           ( 269,832                               136,284        ( 307,120  
  Net income (loss)                                  $                         103,833      $                    ( 954,304      $                        199,795      ( 1,097,458  

(12) Income Taxes

A valuation allowance against deferred tax assets is required to be established or maintained when it is "more likely than not"that all or a portion of deferred tax assets will notbe realized. Management has determined that a valuation allowance is not needed as it expects that the deferred tax asset will be fully utilized.

For the three and six months ended June 28, 2025the deferred tax asset was decreased $52,119and $135,828for the estimated tax provision for Q2 and year to date net income, respectively.

(13)Subsequent Events: Enactment of the One Big Beautiful Bill Act

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (Public Law 119-21), which includes significant modifications to the Internal Revenue Code. The legislation permanently extends and modifies key provisions of the Tax Cuts and Jobs Act of 2017 and introduces new deductions and credits applicable to both individuals and businesses.

Key provisions relevant to the Company include:

Restoration of Immediate Expensing for Domestic Research and Experimental ("R& E") Expenditures: Effective for tax years beginning after December 31, 2024, domestic R& E expenditures may be immediately expensed under new Section 174A, reversing the prior capitalization and amortization requirement. This change may materially impact the Company’s deferred tax assets and current tax expense depending on the volume of qualifying expenditures.

It is anticipated that the unamortized Section 174 R& E expenditures at Q2 2025 will be expensed as follows (subject to further analyses and discussions):

  Q3 2025      899,728              -        899,728      Expense remaining unamortized for 2025 and 37.5% of 2022-2024  
  Q4