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

 

In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon currently known facts and circumstances and applies that rate to its year-to-date earnings or losses. The Company’s effective tax rate is based on expected income and statutory tax rates and takes into consideration permanent differences between financial statement and tax return income applicable to the Company in the various jurisdictions in which the Company operates. The effect of discrete items, such as changes in estimates, changes in enacted tax laws or rates or tax status, and unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained, or as the result of new judicial interpretations or regulatory or tax law changes.

The calculation of the Company’s effective tax rate was as follows for the three and six months ended June 30, 2026 and 2025:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Income before income taxes

 

$

34,951

 

 

$

20,623

 

 

$

54,608

 

 

$

37,683

 

Income tax expense

 

$

3,902

 

 

$

2,148

 

 

$

5,691

 

 

$

3,749

 

Effective tax rate

 

 

11.16

%

 

 

10.42

%

 

 

10.42

%

 

 

9.95

%

 

The effective tax rates for the three and six months ended June 30, 2026 and 2025 differed from the statutory rate of 21.0% primarily due to the income attributable to noncontrolling interest.

 

During June 2026, Stable Land Resources, LLC redeemed 393,860 OpCo Units (together with the cancellation of 393,860 Class B shares) acquired in connection with the 1918 Acquisition, for an equivalent amount of Class A shares. The redemption and exchange of these OpCo units is treated as a taxable purchase by the Company. As a result, the Company’s tax basis in OpCo increased and the Company recorded a deferred tax asset of $5.2 million. As substantially all of the increase in basis is attributable to nonamortizable

capital assets, the Company determined it is unlikely to realize the tax benefits and has recorded a $5.2 million valuation allowance against the created deferred tax asset. Because the deferred tax asset and associated valuation allowance arose in connection with a transaction between the Company and its shareholders, the initial deferred tax asset and associated valuation allowance are recorded in Class A shares on the condensed consolidated balance sheets.