Company: BWMN
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050314
Chunk: 15

Company: Bowman Consulting Group Ltd.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 15
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izable.The Company assesses uncertain tax positions to determine whether income tax positions will more likely than not be sustained upon examination by the Internal Revenue Service or other taxing authorities. If the Company cannot reach a more-likely-than-not determination, no benefit is recorded. If the Company determines that the tax position is more likely than not to be sustained, the Company records the largest amount of benefit that is more likely than not to be realized when the tax position is settled. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and required taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code Section 174 (Section 174). The capitalized expenses were to be amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses.On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law in the U.S. The OBBBA contains a broad range of tax reform provisions affecting businesses including the allowance of immediate expensing of qualifying research and development expenses. As a result, the Company has adopted full expensing for domestic research and experimental expenses incurred in 2025. Further, the Company changed its method of accounting during the quarter ended September 30, 2025, to treat research and development expenses for tax years ended December 31, 2022, 2023, and 2024, as specified research or experimental (SRE) expenses under Section 174. Accordingly, the Company decreased the uncertain tax positions and established a deferred tax liability related to capitalized and amortizable research and development (R&D) costs for tax years 2022, 2023, and 2024 of $52 million. The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in income in the period that includes the enactment date. The Company’s effective tax rate for the nine months ended September 30, 2025 and September 30, 2024 was (12.1)% and 69.5%, respectively. The change in the Company’s effective tax rate is predominantly due to certain non-recurring discrete items in addition to changes in the estimated annual effective tax rate, as discussed below.The most prominent factors impacting the estimated annual effective tax rate computation include a decrease in the