Entity information:

• Entity registrant name: APTEVO THERAPEUTICS INC.
• CIK: 0001671584
• SEC filing page: http://www.sec.gov/Archives/edgar/data/1671584/000156459018005384/0001564590-18-005384-index.htm
• XBRL Instance: http://www.sec.gov/Archives/edgar/data/1671584/000156459018005384/apvo-20171231.xml
• XBRL Cloud Viewer: https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/1671584/000156459018005384/apvo-20171231.xml
• EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001671584
• Generator: Donnelley Financial Solutions
• Total assets: 117,007,000
• Income tax expense (benefit): -23,301,000
• Found reconcilation from statutory to effective rates: True
• Found income tax policy: Coming soon!

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Note 14. Income Taxes

 

During the periods prior to spin-off, the Company did not file separate tax returns as it was included in the tax returns of Emergent entities within the respective tax jurisdictions. For periods during which our operations were included with Emergent, income taxes are presented in these financial statements as if we filed our own tax returns on a standalone basis. All tax amounts shown in the tables below are presented on a consolidated basis, including both continuing operations and discontinued operations.

 

On December 22, 2017 the President of the United State signed into law Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the Tax Act), following its passage by the United States Congress. The Tax Act will make significant changes to U.S. federal income tax laws, including reduction of the corporate tax rate from 35.0% to 21.0%, limitation of the deduction for net operating losses to 80.0% of current year taxable income and elimination of net operating loss carrybacks, one-time taxation of offshore earning at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions. We have estimated the provision for income taxes in accordance with the Tax Act and guidance available to us as of the date of this filing. The provisional amount related to the re-measurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was $10.0 million, which is entirely offset by a valuation allowance resulting in zero total tax expense in the period in which the legislation was enacted. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $0.02 million based on cumulative foreign earnings of $0.06 million.

On December 22, 2017, Staff Accounting Bulletin No. 118, or SAB 118, was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. Additional work is necessary for a more detailed analysis of the deferred tax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense within the measurement period.

Significant components of the benefits for income taxes attributable to continuing operations consist of the following:

 

 

The table above excludes income tax expense from discontinued operations of $23.3 million and $4.4 million for 2017 and 2016, respectively.

 

Loss from continuing operations before income taxes is comprised of:

 

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

 

 

 

The table above includes deferred tax assets from discontinued operations of $0 and $10.4 million for 2017 and 2016, respectively.

 

As of December 31, 2017 and 2016, we have recorded federal net operating losses (NOL) carryforwards of approximately $41.5 and $20.7 million, respectively, state NOL carryforwards of approximately $20.2 million and $9.0, respectively, and tax credit carryforwards of $0.5 million and $0.4 million, respectively, all of which are attributable to continuing operations. The federal losses and credits would begin to expire in 2037. The state net operating losses will begin to expire in varying periods. Carryforwards of net operating losses and tax credits are subject to possible limitation, should a change in ownership occur, as defined by Internal Revenue Code Section 382.

 

The Company files income tax returns in the U.S. and several state jurisdictions. The 2017 and 2016 tax filings are open to review by taxing authorities.

 

We are subject to the accounting guidance for uncertain income tax positions. We believe that our income tax positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material adverse effect on our financial condition, results of operations, or cash flow. Our policy for recording interest and penalties associated with audits and uncertain tax positions is to record such items as a component of income tax expense, and amounts recognized to date are insignificant. No uncertain income tax positions were recorded during 2017 or 2016, and we do not expect our uncertain tax position to change during the next twelve months.

 

The reconciliation of the federal statutory income tax rate to the Company’s effective income tax from continuing operations is as follows: