v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10. Income Taxes

The provision for income taxes was as follows for the three and six months ended June 30, 2026 and June 30, 2025:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

 

(119

)

 

$

 

4,013

 

 

$

 

229

 

 

$

 

7,662

 

State

 

 

 

(22

)

 

 

 

731

 

 

 

 

42

 

 

 

 

1,397

 

Total current income tax expense

 

 

 

(141

)

 

 

 

4,744

 

 

 

 

271

 

 

 

 

9,059

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

 

2,192

 

 

 

 

20

 

 

 

 

6,094

 

 

 

 

75

 

State

 

 

405

 

 

 

4

 

 

 

1,127

 

 

 

14

 

Total deferred income tax expense

 

 

 

2,597

 

 

 

 

24

 

 

 

 

7,221

 

 

 

 

89

 

Total income tax expense

 

$

 

2,456

 

 

$

 

4,768

 

 

$

 

7,492

 

 

$

 

9,148

 

Taxable income generated from certain activities that do not qualify under REIT provisions is earned through the Company's TRSs and is subject to U.S. federal, state, and local income and franchise taxation. The following table reconciles the TRS U.S. federal statutory income tax rate to the TRS effective income tax rate for the three and six months ended June 30, 2026 and June 30, 2025:

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2026

 

 

 

2025

 

 

 

2026

 

 

 

2025

 

 

(in thousands)

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

U.S. Federal Statutory Tax Rate

 

$

 

2,073

 

 

 

21.0

 

%

 

$

 

4,033

 

 

 

21.0

 

%

 

$

 

6,323

 

 

 

21.0

 

%

 

$

 

7,737

 

 

 

21.0

 

%

State and Local Income Taxes, Net of Federal Income Tax Effect (1)

 

 

 

383

 

 

 

3.9

 

 

 

 

 

735

 

 

 

3.8

 

 

 

 

 

1,169

 

 

 

3.9

 

 

 

 

 

1,411

 

 

 

3.8

 

 

Effective Tax Rate

 

$

 

2,456

 

 

 

24.9

 

%

 

$

 

4,768

 

 

 

24.8

 

%

 

$

 

7,492

 

 

 

24.9

 

%

 

$

 

9,148

 

 

 

24.8

 

%
(1)
State taxes in California, Florida and New York made up the majority (greater than 50 percent) of the tax effect in this category.

Deferred income taxes represent the net tax effects of temporary differences between the financial statement carrying amounts of certain assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant temporary differences that give rise to net deferred tax liabilities were as follows:

 

 

 

June 30,

 

 

 

December 31,

 

(in thousands)

 

2026

 

 

 

2025

 

Deferred tax assets:

 

 

 

 

 

Capitalized interest expense

 

$

 

124,403

 

 

$

 

67,458

 

Capitalized Management Fee expense

 

 

16,285

 

 

 

 

11,200

 

Net operating loss carryforward

 

 

 

29,539

 

 

 

 

30,624

 

Total deferred tax assets, net of valuation allowance

 

 

170,227

 

 

 

109,282

 

Deferred tax liabilities:

 

 

 

 

 

 

 

Land basis adjustments, Spin-Off, and acquired Rausch land assets

 

 

56,824

 

 

 

56,824

 

Homesite takedown adjustments

 

 

 

12,995

 

 

 

 

13,981

 

Deferred option fee revenue

 

 

 

184,962

 

 

 

 

115,810

 

Total deferred tax liabilities

 

 

 

254,781

 

 

 

 

186,615

 

Deferred tax liabilities, net

 

$

 

84,554

 

 

$

 

77,333

 

As of June 30, 2026, the Company had federal and state net operating loss (“NOL”) carryforwards of approximately $118.7 million that may be carried forward indefinitely and do not expire.

A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on available evidence, it is more likely than not that such assets will not be realized. The Company evaluated its deferred tax assets as of June 30, 2026 and concluded that it is more likely than not that the deferred tax assets will be realized. This assessment considered all available positive and negative evidence, including recent financial performance, actual earnings, future reversals of existing temporary differences, projected future taxable income, and tax planning strategies. As such, a valuation allowance was not recorded against the deferred tax assets, including the NOL, as of June 30, 2026. The Company had no gross unrecognized tax benefits as of June 30, 2026.

There were no income taxes paid by the Company during the three and six months ended June 30, 2026.