Company: CPSH
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0001437749-25-032553
Chunk: 6

Company: CPS TECHNOLOGIES CORP/DE/
Filing Date: 2025-10-31
Form: 10-Q
Item: Part I, Item 1
Chunk 6
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241,845  
  Income (loss) before income taxes                                            321,565                     ( 1,415,522                                657,644      ( 2,820,100  
  Income tax provision (benefit)                                               113,601                       ( 372,683                                249,885        ( 679,803  
  Net income (loss)                                  $                         207,964      $              ( 1,042,839      $                         407,759      ( 2,140,297  

(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 nine months ended September 27, 2025the deferred tax asset was decreased $113,601and $249,429for the estimated tax provision for Q3 and year to date net income, respectively.

(13) 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.

During Q3 2025, the Company expensed $899,728of unamortized Section 174 R& E 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):

  Q4 2025      187,193            -      187,193      Expense 12.5% of 2022-2024  
  Q1 2026      -            187,193      187,