Company: PRTA
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001559053-25-000023
Chunk: 24

Company: PROTHENA CORP PUBLIC LTD CO
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 24
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 assets for the deductibility of stock compensation and capitalization and amortization of research and development costs.

The Company has generally computed its interim period provision for (benefit from) income taxes by applying its forecasted effective tax rate to year-to-date earnings. However, due to a significant amount of U. S. permanent differences relative to the amount of U. S. forecasted income used in computing the effective tax rate, the effective tax rate is highly sensitive to minor fluctuations in U. S. forecasted income. As such, the Company has computed the U. S. component of the consolidated provision for (benefit from) income taxes for the three months ended March 31, 2025, using an actual year-to-date tax calculation.

The non-U. S. tax expense continues to be zero due to cumulative historic and year-to-date losses and a full valuation allowance on our deferred tax assets in our non-U. S. jurisdictions.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company's deferred tax assets (“ DTA”) are composed primarily of its Irish subsidiaries' net operating loss carryforwards, California net operating loss carryforwards available to reduce future taxable income of the Company's U. S. subsidiaries, federal and California tax credit carryforwards, share-based compensation, capitalized R& D, and other temporary differences. The Company maintains a valuation allowance against certain U. S. federal and state and Irish deferred tax assets. Each reporting period, the Company evaluates the need for a valuation allowance on its deferred tax assets by jurisdiction.

No provision for income tax has been recognized on undistributed earnings of the Company’s U. S. subsidiaries as the Company considers the U. S. earnings to be indefinitely reinvested.

The Company is subject to reviews and audits by the U. S. Internal Revenue Service (“ IRS”), the Irish Revenue Commissioners, and other taxing authorities from time to time. The Company’s U. S. subsidiaries are currently under examination by the IRS for tax year 2021. The Company periodically reviews its uncertain tax positions. The Company’s assessment is based on many factors, including any ongoing IRS audits. For the three months ended March 31, 2025, the Company’s assessment did not result in a material change in unrecognized tax benefits.

ITEM 2. MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS