Company: SRPT
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000950170-25-029973
Chunk: 91

Company: Sarepta Therapeutics, Inc.
Filing Date: 2025-02-28
Form: 10-K
Item: Item 1B
Chunk 91
---
 )

        Valuation allowance

        (888,335
        )

        (883,665
        )

        Net deferred tax assets
         
        $
        2,252

        $
        2,063

      For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to currently deduct research and development expenses and requires taxpayers to capitalize and amortize the costs over five years for research activities performed in the United States and 15 years for research activities performed outside the United States. The requirement to capitalize research and development costs for tax purposes resulted in the Company having taxable profits and recording federal and state tax expense of $5.1 million and $19.7 million, respectively. The state tax expense of $19.7 million is primarily related to the temporary suspension of utilizing net operating loss carryforwards in certain states the Company operates in.On a periodic basis, the Company reassesses the valuation allowance on its deferred tax assets, weighing positive and negative evidence to assess the recoverability of such deferred tax assets. In assessing the Company’s ability to realize its net deferred tax assets, the Company considered various factors, including future reversals of existing taxable temporary differences, projected future taxable income, potential carryback claims and tax planning strategies to determine whether it is more likely than not that some portion or all of its net deferred tax assets will not be realized. Based upon these factors, the Company has concluded that it is more likely than not that the Company will not recognize the benefits of its net federal and state deferred tax assets. Accordingly, a full valuation allowance against the U.S. net deferred tax assets is maintained at December 31, 2024 and 2023. The Company continues to monitor its recent earnings history and it is possible that within the next 12 months, there may be sufficient positive evidence to release a portion or all of the Company’s valuation allowance. The release of the valuation allowance, as well as the exact timing and the amount of such release, continue to be subject to, among other things, the Company’s level of profitability, revenue growth, and expectations regarding future profitability. Release of the valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. The total deferred tax asset balance subject to the valuation allowance was approximately $890.6 million as of December 31, 2024. The Company will continue to monitor the need for a full