Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes In connection with the Transactions, we entered into a new Tax Sharing Agreement with Liberty Media. The Tax Sharing Agreement generally allocates taxes, tax benefits, tax items and tax-related losses between Liberty Media and us in a manner consistent with the tax sharing policies of Liberty Media in effect prior to the Split-Off, with taxes, tax benefits and tax items attributable to the assets, liabilities and activities attributed to the Liberty Formula One Group and the Liberty Live Group being allocated to Liberty Media, and taxes, tax benefits and tax items attributable to the assets, liabilities and activities attributed to the Liberty SiriusXM Group being allocated to us. In addition, the Tax Sharing Agreement includes additional provisions related to the manner in which any taxes or tax-related losses arising from the Split-Off will be allocated between the parties and provides restrictive covenants intended to preserve the generally tax-free treatment of the Transactions. The failure by a party to comply with its restrictive covenants may change the general allocation of taxes, tax benefits and tax items between the parties related to the Transactions. The parties have agreed to indemnify each other for taxes and losses allocated to them under the Tax Sharing Agreement and for taxes and losses arising from a breach by them of their respective covenants and obligations under the Tax Sharing Agreement. The Tax Sharing Agreement also includes provisions addressing the filing of tax returns, control of tax audits, cooperation on tax matters, retention of tax records, indemnification and other tax matters. Income tax expense was $73 and $59 for the three months ended June 30, 2026 and 2025, respectively, and $154 and $124 for the six months ended June 30, 2026 and 2025, respectively. Our effective tax rate was 23.4% and 22.3% for the three months ended June 30, 2026 and 2025, respectively, and 24.1% and 23.3% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate for the three and six months ended June 30, 2026 were primarily driven by federal and state income tax expense, tax losses related to share-based compensation and the fair value adjustment to the Convertible Notes that is not deductible for tax purposes, partially offset by certain tax credits. The effective tax rate for the three and six months ended June 30, 2025 were primarily driven by federal and state income tax expense and tax losses related to share-based compensation, partially offset by certain tax credits. We estimate our effective tax rate expense for the year ending December 31, 2026 will be approximately 22%. We recognized net tax benefits of $9 during each of the three months ended June 30, 2026 and 2025, and we recognized net tax benefits of $17 and $12 during the six months ended June 30, 2026 and 2025, respectively, related to our tax equity investments. These recognized net tax benefits were recorded to Income tax expense in our unaudited consolidated statement of comprehensive income. The net tax benefits included tax credits and other income tax benefits of $45 and $40 during the three months ended June 30, 2026 and 2025, respectively, and $93 and $77 during the six months ended June 30, 2026 and 2025, respectively, which were partially offset by amortization expense of $36 and $31 during the three months ended June 30, 2026 and 2025, respectively, and $76 and $65 during the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and December 31, 2025, we had a valuation allowance related to deferred tax assets of $79 and $87, respectively, that were not likely to be realized due to the timing of certain federal and state net operating loss limitations.
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