v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
Note 17 - Income Taxes
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Income tax expense (benefit)
$(3.2)$1.3$(2.9)$(11.7)
Income (loss) before income taxes$(15.1)$22.8 $(7.1)$32.0 
Effective tax rate20.9 %5.8 %40.3 %(36.6)%
The year-to-date income tax expense (benefit) in interim periods is the product of the estimated annual effective tax rate (AETR) applied to year-to-date ordinary income, exclusive of discrete items. Tax effects of discrete items are then included to arrive at the total reported interim income tax provision, as they are recognized in the period in which they occur. Discrete items generally include items such as changes in tax laws, return-to-provision adjustments, uncertain tax position adjustments, valuation allowance changes, current year activity for which it is not appropriate to apply the projected AETR, etc. Discrete items may cause the quarterly or year to date effective tax rate to differ significantly from the projected annual effective tax rate.
Income tax benefit for the six months ended June 30, 2026 includes income tax expense attributed to the U.S. jurisdiction whereas in the six months ended June 30, 2025 no such U.S. jurisdiction income tax expense was recognized due to a full valuation allowance against U.S. federal deferred tax assets. The income tax benefit for the six months ended June 30, 2026 also includes the discrete tax impact of certain MSR fair value changes and hedging gains and losses. For the six months ended June 30, 2025, the $11.7 million income tax benefit includes the recognition of a $13.3 million benefit due to the favorable resolution of a prior-year uncertain tax position.
Following the release of a significant portion of our valuation allowance as of December 31, 2025 ($120.1 million), our annual effective tax rate for the year ended December 31, 2026 is expected to exceed the 21% federal statutory income tax rate primarily due to state taxes and the disallowance of certain executive compensation expenses.
As of June 30, 2026, we believe that the weight of the positive evidence outweighs the negative evidence regarding the realization of our U.S. federal deferred tax assets, including cumulative income in recent years and expectations regarding future profitability. As of June 30, 2026, for certain U.S. state net operating losses and interest expense disallowance carryforwards, we believe the weight of the negative evidence continues to outweigh the positive evidence regarding the realization of these state deferred tax assets and as a result are not considered to be more likely than not realizable; therefore, we have maintained a valuation allowance against these assets.
The realization of deferred tax assets is dependent on our ability to generate sufficient future taxable income. We conduct periodic evaluations of positive and negative evidence to determine whether it is more likely than not that the deferred tax asset can be realized in future periods. In these evaluations, we give more significant weight to objective evidence, such as our actual financial condition and historical results of operations, as compared to subjective evidence, such as projections of future taxable income or losses. Other factors considered in these evaluations are future reversals of temporary differences, tax character and the impact of tax planning strategies that may be implemented, if warranted.