v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense (benefit) for the three and six months ended June 30, 2026 and 2025 was as follows:
Three Months Ended June 30,Six Months Ended June 30,
($ in thousands)2026202520262025
Income tax expense (benefit)$20,366 $(115,017)$39,932 $(109,952)
The Company recognized a federal, state and foreign income tax expense of $20.4 million and $39.9 million during the three and six months ended June 30, 2026, respectively, compared to an income tax benefit of $115.0 million and $110.0 million during the same respective periods in 2025. The effective tax rates for the three and six months ended June 30, 2026 were 41.0% and 41.8%, respectively, and were 133.5% and 157.3% during the same respective periods in 2025. The difference between the Company’s year-to-date effective tax rate and the U.S. statutory tax rate of 21% was primarily due to non-taxable income (loss) attributable to non-controlling interest, valuation allowance recorded on foreign tax credits, income tax rate differences related to the Company’s foreign operations, and non-deductible expenses.
On a quarterly basis, management considers new evidence, both positive and negative, that could affect its view of the future realization of its deferred tax asset and adjusts the valuation allowance when it is more likely than not that all or a portion of the deferred tax asset may not be realized. For purposes of forecasting taxable income, the Company relied on historical pre-tax earnings trends and incorporated assumptions about future performance that are expected to impact pre-tax results. The Company did not recognize all U.S. deferred tax assets because the Company determined that a portion of excess income tax basis in RSILP will only reverse upon the occurrence of certain events, such as a sale of the Company’s interest in RSILP, none of which are expected to occur in the foreseeable future. As of June 30, 2026, the valuation allowance on U.S. deferred tax assets per the annualized effective tax rate computation is $90.2 million.
On July 4, 2025, the U.S. Congress passed budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill (“OBBB”). The OBBB contains several changes to corporate taxation including modifications to capitalization of research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. The Company has evaluated OBBB and determined that it does not have a material impact on the condensed consolidated financial statements.
In connection with a Business Combination consummated in December 2020, RSI ASLP, Inc. (the “Special Limited Partner”), which is a wholly owned subsidiary of the Company, entered into the Tax Receivable Agreement (the “TRA”), which generally provides that it pay 85% of certain net tax benefits, if any, that the Company (including the Special Limited Partner) realizes (or in certain cases is deemed to realize) as a result of an increase in tax basis and tax benefits related to the transactions contemplated under the agreement governing the previously consummated Business Combination (the “Business Combination Agreement”) and the exchange of Retained RSILP Units (as defined in the Business Combination Agreement) for Class A Common Stock (or cash at the Company’s option) pursuant to RSILP’s amended and restated limited partnership agreement and tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA. These payments are the obligation of the Special Limited Partner and not of RSILP. The actual increase in the Special Limited Partner’s allocable share of RSILP’s tax basis in its assets, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of exchanges, the market price of the Class A Common Stock at the time of the exchange and the amount and timing of the recognition of RSI and its consolidated subsidiaries’ (including the Special Limited Partner’s) income. While many of the factors that will determine the amount of payments that the Special Limited Partner will make under the TRA are outside of the Company's control, the Company expects that the payments the Special Limited Partner will make under the TRA will be substantial and could have a material adverse effect on the financial condition of the Company.
In 2025, based primarily on the three-year cumulative income analysis and anticipated future earnings, management determined that it is more likely than not that the Company will be able to utilize its deferred tax assets subject to the TRA. Based on the recognition of the deferred tax assets, the Company also recognized the TRA liability. The initial recognition of the TRA liability in 2025 resulted in change in tax receivable agreement liability in the condensed statement of operations. Subsequent recognition of additional TRA liability related to exchanges after June 30, 2025 of Retained RSILP Units is recorded as a reduction to additional paid-in capital. As of June 30, 2026 and December 31, 2025, the Company recognized a TRA liability of $239.7 million and $130.1 million (including $0.8 million classified as current liability as of June 30, 2026 and $1.2 million as of December 31, 2025), respectively, based on tax benefits realized in the current and
prior tax year. Change in tax receivable agreement liability was nil during the three and six months ended June 30, 2026, compared to $112.7 million and $113.0 million during the same respective periods in 2025. The increase in the liability is primarily due to the issuance of Class A Common Stock upon RSILP Unit exchanges.