v3.25.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Components of “Income (loss) before income taxes” in the Consolidated Statements of Operations is attributable to the following for the years ended December 31, 2025, 2024 and 2023:
Years Ended December 31,
202520242023
U.S.$115,593 $22,092 $(52,341)
Foreign(1,918)— — 
Income (loss) before income taxes $113,675 $22,092 $(52,341)
The (benefit) provision for income taxes is presented within the “Income tax (benefit) provision” line item in the Consolidated Statements of Operations. The following table details the Company’s income tax (benefit) provision for the years ended December 31, 2025, 2024 and 2023:
Years Ended December 31,
202520242023
Current:
Federal$1,115 $943 $— 
State4,316 1,234 102 
Foreign— — — 
Total current
$5,431 $2,177 $102 
Deferred:
Federal$(14,538)$— $— 
State(11,499)— — 
Foreign— — — 
Total deferred(26,037)— — 
Total (benefit) provision for income taxes $(20,606)$2,177 $102 

The Company’s income tax (benefit) provision for the years ended December 31, 2025, 2024 and 2023 is $(20.6) million, $2.2 million, and $0.1 million, respectively. The income tax benefit in the current year is due to a partial release of the Company’s valuation allowance following the Recombination in the third quarter of 2025 and significant profits in the Company’s lending business.
Tax Rate Reconciliation
The following table is a reconciliation of the income taxes expected at the statutory federal income tax rate and the income tax (benefit) provision for the years ended December 31, 2025, 2024 and 2023:
December 31,
202520242023
Tax at federal statutory rate21.0 %21.0 %21.0 %
State tax, net of federal benefit(4.1)5.8 0.4 
Permanent items0.7 (5.3)— 
Nondeductible officers’ compensation2.0 — — 
Change in valuation allowance(29.5)(6.9)(0.2)
Stock-based compensation(4.6)16.6 (2.2)
Tax credits(5.0)(43.0)(4.1)
Return to provision0.2 18.0 (15.1)
Rate change / state impact(0.2)(10.8)— 
Change in unrecognized tax benefits2.4 12.9 — 
Other(1.0)1.6 — 
Total(18.1)%9.9 %(0.2)%
The components of the Company’s deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows:
December 31,
20252024
Deferred tax assets:
Net operating losses$51,541 $59,423 
Tax credits5,588 2,897 
Loan sale indemnification reserve1,571 1,520 
Stock-based compensation14,013 10,404 
Intangible assets5,557 5,334 
Research and development capitalization4,472 14,726 
Lease liabilities1,007 695 
Other3,617 823 
Total deferred tax assets$87,366 $95,822 
Deferred tax liabilities:
Servicing asset and other fair value adjustments$(28,718)$(22,982)
Unrealized gains (losses)(A)
(2,486)(2,621)
ROU assets(1,320)(611)
Mark to market(4,161)— 
Total deferred tax liabilities$(36,685)$(26,214)
Valuation allowance(24,644)(69,608)
Net deferred tax assets$26,037 $— 
(A)    Primarily relates to unrealized gains from digital assets held for sale.
In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on available objective evidence and the Recombination during 2025, Management believes it is more-likely-than-not that a significant portion of our deferred tax assets would be realizable as of the balance sheet date. Accordingly, the Company has released a significant portion of its valuation allowance in the current year. The valuation allowance decreased by $45.0 million and $1.5 million at December 31, 2025 and 2024, respectively, compared to the prior year. At December 31, 2025 and 2024, the valuation allowance was $24.6 million and $69.6 million, respectively.
As of December 31, 2025 the Company has net operating losses for U.S. federal, state and foreign tax purposes of approximately $34.0 million, $21.8 million, and $0.3 million, respectively. Federal tax losses will carryforward indefinitely. For state purposes, such losses would begin to expire in 2029.
As of December 31, 2025 the Company has federal and state research tax credit carryforwards of $11.4 million and $0.2 million, respectively. The federal credits have a 20-year carryforward period and will begin to expire in 2038 and the state credits may be carried forward indefinitely.
The Company’s ability to utilize the net operating loss in the future may be subject to substantial restrictions in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws.
The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition at the effective date to be recognized.
At December 31, 2025, 2024 and 2023 the unrecognized tax benefits recorded were approximately $6.1 million, $3.0 million and $0.1 million respectively, that if recognized, would benefit the Company’s effective tax rate. The unrecognized tax benefits are netted against the respective deferred tax assets. The Company does not anticipate a significant change in the unrecognized tax benefits within the next 12 months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefit is as follows:
December 31,
202520242023
Unrecognized tax benefits at beginning of year$3,045 $104 $104 
Increases related to current year tax positions1,245 716 — 
Increases related to prior year tax positions2,269 2,225 — 
Decreases related to prior year tax positions(462)— — 
Settlements with tax authorities— — — 
Expiration of the statute of limitations— — — 
Unrecognized tax benefits at end of year$6,097 $3,045 $104 
All tax years since inception are subject to examination by tax authorities. The Company is currently not under examination by any federal or state jurisdiction.