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, 2015

10. INCOME TAXES

	2015		2014

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

Deferred
Federal		(3,105,641)		(3,868,524)
State		42,562		810,914
Total deferred		(3,063,079)		(3,057,610)

Change in valuation allowance		3,063,079		3,057,610
Total	$	—	$	—

Deferred tax assets consisted of the following at December 31:

	2015		2014

Deferred tax assets
Federal net operating loss	$	32,565,906	$	29,246,965
Federal research and development tax credit carryforwards		2,858,628		2,689,775
State net operating loss		1,812,722		1,813,954
State research and development tax credit carryforwards		806,568		753,818
Capitalized research and development expenses		9,883,932		10,609,942
Stock-based compensation expense		1,993,664		1,758,909
Charitable contributions carryforwards		340		—
Intangible assets		253,971		313,412
Charitable contribution carryforwards		—		—
Accrued liabilities		35,332		35,392
Total deferred tax assets		50,211,063		47,222,167

Deferred tax liabilities
Depreciable assets		(171,602)		(245,785)
Total deferred tax liabilities		(171,602)		(245,785)

Net deferred tax assets		50,039,461		46,976,382
Less– valuation allowance		(50,039,461)		(46,976,382)
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,
	2015			2014


Income tax benefit using U.S. federal statutory rate		34.00	%		34.00	%
State income taxes		(0.50)	%		(6.65)	%
Permanent items		23.18	%		9.62	%
Change in valuation allowance		(55.76)	%		(37.98)	%
Other		(0.92)	%		1.01	%
Total		—	%		—	%

As of December 31, 2015, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $95,782,000 and $34,530,000 respectively, which expire in 2018 through 2034 and in 2015 through 2034, respectively. In addition, the Company has federal and state research and development and investment tax credits of approximately $2,859,000 and $1,222,000, respectively which expire in 2018 through 2033 and in 2018 through 2028, 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, 2015 or 2014, 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.