Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

10.         Income Taxes

We have incurred net operating losses since inception. We have not reflected the benefit of net operating loss carryforwards in the accompanying financial statements and have established a full valuation allowance against our deferred tax assets.

On December 31, 2021 and 2020, the Company had an income tax receivable of approximately $321,000 and $323,000 respectively, comprised of refundable tax incentives related to research and development activities of our subsidiary Panbela Therapeutics Pty Ltd.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as operating losses and tax credit carryforwards.

The significant components of our deferred tax assets and liabilities are as follows (in thousands):

	December 31,
Deferred tax assets (liabilities)	2021			2020
Net operating loss carryforwards	$	9,986		$	7,660
Research credit carryforwards		235			235
Stock-based compensation		1,734			1,498
Other		66			70
Deferred tax assets		12,021			9,463
Valuation allowance		(12,021	)		(9,463	)
Net deferred tax asset	$	-		$	-

Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carry-forward period. Because of our history of operating losses, management believes that the deferred tax assets arising from the above-mentioned future tax benefits are currently not likely to be realized and, accordingly, we have provided a full valuation allowance.

A reconciliation of the statutory tax rates and the effective tax rates is as follows:

	Year Ended December 31,
	2021			2020
Statutory rate		21.0	%		21.0	%
Permanent differences		2.1			1.7
Change in effective tax rate		(0.4	)		-
Valuation allowance		(24.3	)		(26.5	)
Foreign research incentives		3.1			5.4
Other		1.6			3.8
Effective rate		3.1	%		5.4	%

Net operating losses and tax credit carryforwards as of December 31, 2021, are as follows:

(In Thousands)	Amount		Expiration Years
Net operating losses--federal		12,958	Expires beginning 2031
2018 to 2021 net operating losses -- federal		12,068	Never expires
Tax credits--federal		235	Beginning 2041

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the IRC, and similar state provisions. We have not performed a detailed analysis to determine whether an ownership change under Section 382 of the IRC has occurred. The effect of an ownership change would be the imposition of an annual limitation on the use of net operating loss carryforwards attributable to periods before the change.

The Company is subject to taxation in the United States and Australia. Tax returns for the year ended December 31, 2017 and thereafter are subject to examinations by federal and state tax authorities. Tax returns of Panbela Therapeutics Pty Ltd. for the year ended December 31, 2015 and thereafter are subject to examination by the Australian tax authorities.