Company: KROS
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001664710-25-000046
Chunk: 422

Company: Keros Therapeutics, Inc.
Filing Date: 2025-05-06
Form: 10-Q
Item: Item 4
Chunk 422
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 modified by the CARES Act, federal NOLs incurred in taxable years beginning after December 31, 2017 can be carried forward indefinitely, but the deductibility of federal NOLs in taxable years beginning after December 31, 2020, is limited. We expect to use most of our U.S. federal and state NOL carryforwards during 2025, subject to limitation. 

As of December 31, 2024, we had $11.9 million of U.S. federal and $5.4 million of state tax credit carryforwards. We expect to use some of our U.S. federal and state tax credit carryforwards during 2025, subject to limitation. 

Our NOL and tax credit carryforwards are subject to review and possible adjustment by the U.S. and state tax authorities. In addition, under Sections 382 and 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL and research and development, or R&D, tax credit carryforwards to offset its post-change taxable income and tax may be limited. This could limit the amount of NOLs or R&D tax credit carryforwards that we can utilize annually to offset future taxable income or tax liabilities. Subsequent ownership changes and changes to the U.S. tax rules in respect of the utilization of NOLs and R&D tax credits carried forward may further affect the limitation in future years. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. 

Through December 31, 2024, we completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since our formation. The results of this study indicated that we experienced ownership changes as defined by Section 382 of the Code in 2016 and 2020. These ownership changes have subjected and will continue to subject our NOL and tax credit carryforwards to an annual limitation, which may significantly restrict our ability to use them to offset our taxable income and tax in periods following an ownership change. Based on the results of the study, management has determined that these limitations may have a material impact on our ability to utilize our NOLs and R