Cellectar Biosciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

INCOME TAXES

12 Months Ended

Dec. 31, 2014

10. INCOME TAXES

	2014		2013

Tax provision (benefit)
Current
Federal	$	—	$	—
State		—		—
Total current		—		—

Deferred
Federal		(3,868,524)		(4,705,250)
State		810,914		134,225
Total deferred		(3,057,610)		(4,571,025)

Change in valuation allowance		3,057,610		4,571,025
Total	$	—	$	—

Deferred tax assets consisted of the following at December 31:

	2014		2013

Deferred tax assets
Federal net operating loss	$	29,246,965	$	25,731,718
Federal research and development tax credit carryforwards		2,689,775		2,480,417
State net operating loss		1,813,954		2,070,642
State research and development tax credit carryforwards		753,818		724,200
Capitalized research and development expenses		10,609,942		11,128,803
Stock-based compensation expense		1,758,909		1,599,005
Intangible assets		313,412		380,339
Charitable contribution carryforwards		—		34,850
Accrued liabilities		35,392		26,112
Total deferred tax assets		47,222,167		44,176,086

Deferred tax liabilities
Depreciable assets		(245,785)		(257,314)
Total deferred tax liabilities		(245,785)		(257,314)

Net deferred tax assets		46,976,382		43,918,772
Less– valuation allowance		(46,976,382)		(43,918,772)
Total deferred tax assets	$	—	$	—

A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations is as follows:

	Year ended December 31,
	2014		2013
	(Restated)
Income tax benefit using U.S. federal statutory rate	34.00	%	34.00	%
State income taxes	(6.65)	%	(0.82)	%
Permanent items	9.62	%	5.10	%
Change in valuation allowance	(37.98)	%	(42.40)	%
Other	1.01	%	4.12	%
Total	—	%	—	%

As of December 31, 2014, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $86,020,000 and $34,553,000 respectively, which expire in 2018 through 2033 and in 2014 through 2033, respectively. In addition, the Company has federal and state research and development and investment tax credits of approximately $2,690,000 and $1,142,000, respectively which expire in 2018 through 2032 and in 2018 through 2027, respectively. The amount of NOLs and tax credit carryforwards which may be utilized annually in future periods will be limited pursuant to Section 382 of the Internal Revenue Code as a result of substantial changes in the Company’s ownership that have occurred or that may occur in the future. The Company has not quantified the amount of such limitations.

Because of the Company’s limited operating history, continuing losses and uncertainty associated with the utilization of the NOLs in the future, management has provided a full allowance against the gross deferred tax asset.

The Company did not have unrecognized tax benefits or accrued interest and penalties at any time during the years ended December 31, 2014 or 2013, and does not anticipate having unrecognized tax benefits over the next twelve months. The Company is subject to audit by the IRS and state taxing authorities for tax periods commencing January 1, 2009. Additionally, the Company may be subject to examination by the IRS for years beginning prior to January 1, 2009 as a result of its NOLs. However, any adjustment related to these periods would be limited to the amount of the NOL generated in the year(s) under examination.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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