Income Taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 10. Income Taxes A reconciliation of the statutory federal income tax rate to our effective rate for continuing operations is provided below:
During the three months ended June 30, 2026, the Company entered into a settlement agreement with the Internal Revenue Service (the “IRS”) regarding the treatment of certain research and development expenses claimed in prior years. As a result of the settlement agreement, the Company recognized a discrete income tax expense of approximately $43.9 million during the quarter. The settlement agreement did not result in a current period cash payment, as the Company had previously remitted cash tax payments in excess of the amounts claimed in prior years and ultimately due under the settlement agreement. A comparison of the Company’s effective tax rate for the three months ended June 30, 2026, to the three months ended June 30, 2025, is not meaningful due to the impact of the discrete settlement agreement relative to the amount of income earned. For the six months ended June 30, 2026, the Company had a loss before income taxes with income tax expense, primarily from the impact of the discrete settlement agreement, therefore a comparison of the effective tax rate to the six months ended June 30, 2025, is not meaningful. We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecasts and other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect the amount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economic conditions, it is possible that actual results could differ from the estimates used in previous analyses. These differences could have a material impact on our consolidated results of operations or financial position. On July 4, 2025, H.R.1 - One Big Beautiful Bill was enacted into law (the “Act”). The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The Company’s deferred income tax liabilities as of June 30, 2026, and December 31, 2025, were $238.2 million and $178.0 million, respectively. The increase was primarily due to the bonus depreciation and domestic research cost expensing elements of the Act. The Act did not have a material impact on our income tax expense for the period ended June 30, 2026, and we do not expect it to materially change our effective income tax rate for the year ending December 31, 2026. We anticipate the Act will have a material impact on our future financial results including cash flows. The permanent extension of 100% bonus depreciation and reinstatement of domestic research cost expensing are anticipated to reduce our cash tax payments in current and future years, and to increase our operating cash flows. |
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