INCOME TAXES |
6 Months Ended |
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Jun. 30, 2025 | |
| INCOME TAXES | |
| INCOME TAXES |
8. INCOME TAXES The Company’s effective income tax rates for the three and six months ended June 30, 2025 were 0.9% and (0.6%), respectively, compared to effective income tax rates of 0.9% and (1.7%) for the corresponding prior-year periods. The changes in the effective income tax rates were primarily due to the Company’s projections for pre-tax book income in 2025, changes in valuation allowances, and the release of deferred tax liabilities in connection with the sale of Stockman’s intangible assets. The Company’s income tax provision or benefit for interim periods has been determined using an estimate of its annual effective tax rate, adjusted for discrete items.
The Company continues to assess the realizability of deferred tax assets (“DTAs”) and concluded that it has not met the “more likely than not” threshold. At June 30, 2025, the Company continues to provide a valuation allowance against its DTAs that cannot be offset by existing deferred tax liabilities. In accordance with Accounting Standards Codification 740 (“ASC 740”), this assessment has taken into consideration the jurisdictions in which these DTAs reside. The valuation allowance against DTAs has no effect on the actual taxes paid or owed by the Company.
Changes in tax laws, rulings, policies, or related legal and regulatory interpretations occur frequently and may have significant favorable or adverse impacts on our effective tax rate. On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”), which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The Company is still in the process of evaluating the OBBBA and an estimate of the financial impact cannot be made at this time. However, management does not expect it to have a material impact on the results of operations.
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