Achieve Life Sciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Tax (Tables)

Income Tax (Tables)

12 Months Ended

Dec. 31, 2023

Summary of U.S. and Foreign Components of Income (Loss) before Income Taxes

U.S. and foreign components of income (loss) before income taxes were as follows (in thousands):


(In thousands)	2023			2022			2021
U.S.	$	(28,982	)	$	(41,660	)	$	(31,411	)
Foreign		(833	)		(690	)		(1,741	)
Income (loss) before income taxes	$	(29,815	)	$	(42,350	)	$	(33,152	)

Reconciliation of Income Tax Attributable to Operations

Income tax expense/(recovery) consisted of the following (in thousands):


(In thousands)	2023			2022			2021
Income tax recovery at statutory rates (at a rate of 21% for all years presented)	$	(6,261	)	$	(8,894	)	$	(6,962	)
Expenses not deducted for tax purposes		477			299			224
Effect of tax rate changes on deferred tax assets and liabilities		(169	)		(18	)		17
Rate differential on foreign earnings		(36	)		(26	)		(77	)
Research and development tax credits		(883	)		(1,154	)		(134	)
Change in valuation allowance		7,686			10,464			7,544
Reassessment of previously recognized net operating losses		—			9			(620	)
Adjustment to prior year research and development tax credits		(760	)		(731	)		—
Other		(54	)		51			8
Income tax expense/(recovery)	$	—		$	—		$	—

Summary of Tax Effects of Temporary Differences and Carryforwards Rise to Deferred Tax Assets and Liabilities

[b] The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets and liabilities are as follows (in thousands):


	2023			2022
Deferred tax assets
Tax basis in excess of book value of assets	$	899		$	899
Net operating loss carryforwards		48,867			43,380
Research and development deductions and credits		10,716			8,942
Stock options		1,134			1,042
Capitalized R&D expenses		11,528			11,342
Other		434			334
Total deferred tax assets		73,578			65,939
Valuation allowance		(73,232	)		(65,546	)
Net deferred tax assets		346			393
Deferred tax liabilities
Right-of-use asset		(91	)		(91	)
Other		(255	)		(302	)
Total deferred tax liabilities		(346	)		(393	)

Net deferred tax liabilities		—			—

Reconciliation of Unrecognized Tax Benefits of Uncertain Tax Positions

[c] A reconciliation of the unrecognized tax benefits of uncertain tax positions for the year ended December 31, 2023 is as follows (in thousands):


	Year ended
	December 31,
	2023		2022		2021
Gross unrecognzed tax benefits at January 1	$	761	$	761	$	767
Additions (reductions) from tax positions taken in prior years		—		—		(6	)
Additions (reductions) from tax positions taken in the current year		—		—		—
Tax settlements		—		—		—
Gross unrecognzed tax benefits at December 31	$	761	$	761	$	761

Summary of Years Open to Examination Under Different Jurisdiction

We are subject to taxes in Canada, the U.K. and the United States until the applicable statute of limitations expires. However, in Canada and the United States, all tax years remain subject to examination due to the carryforward of unutilized NOLs and tax credits. Tax audits by their very nature are often complex and can require several years to complete. To our knowledge, we are not currently under examination by any taxing authorities.


Tax		Years open to
Jurisdiction		examination
Canada		2019 to 2023
United Kingdom		2017 to 2023
US		2020 to 2023