Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 12. Income Taxes The Company’s effective tax rate on continuing operations for the three and six months ended June 30, 2026 differed from the U.S. federal statutory rate primarily due to the release of valuation allowances against deferred tax assets, including net operating loss (“NOL”) carryforwards and other deferred tax assets, and the projected mix of earnings and losses attributable to the noncontrolling interest. The Company’s effective tax rate on continuing operations for the three and six months ended June 30, 2025 differed from the U.S. federal statutory rate primarily due to the projected mix of earnings and losses attributable to the noncontrolling interest and the changes in valuation allowances previously recorded against deferred tax assets, including NOL carryforwards and other deferred tax assets. Deferred income taxes reflect the net tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts reported for income tax purposes. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences attributable to those temporary differences and the expected benefits of net operating losses and carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some or all of a deferred tax asset will not be realized. In making such a determination, the Company considers all available positive and negative evidence, with greater weight given to objectively verifiable evidence. Such evidence includes recent results of operations, future reversals of existing taxable temporary differences, projected future taxable income, and tax planning strategies. As of June 30, 2026, the Company had generated cumulative income over the most recent three-year period. Based on our evaluation of all available positive and negative evidence, including the Company’s cumulative income over the most recent three-year period, which represents objectively verifiable positive evidence, the Company concluded that it is more likely than not that substantially all of its deferred tax assets will be realized. Accordingly, the Company released $33.8 million of its valuation allowance during the three and six months ended June 30, 2026, which was recognized as a discrete income tax benefit. Tax positions taken in tax years that remain open under the statute of limitations will be subject to examinations by tax authorities. With few exceptions, the Company is no longer subject to state or local examinations by tax authorities for tax years ended December 31, 2021 or prior. Tax Receivable Agreement The Company entered into a TRA with certain owners of FOA Equity. Initial obligations under the TRA were measured at fair value and are subsequently remeasured at fair value each reporting period. Refer to Note 5 - Fair Value for additional information. The Company also records obligations under the TRA resulting from applicable future exchanges of Class A LLC units of FOA Equity (“Class A LLC Units”) as they occur at the gross undiscounted amount of the expected future payments, with an increase to the TRA liability and the related deferred tax asset and valuation allowance (if any), and an offset to additional paid-in capital. If the Company determines that it is no longer probable that a related contingent payment will be required based on expected future cash flows, the related liability is reversed through earnings, and no additional liabilities are recorded until such payments become probable. In a prior year, the Company determined that the contingent liability portion of the TRA obligation was no longer probable, consistent with the Company’s determination that a full valuation allowance was required against the deferred tax assets. Accordingly, the Company reversed the previously recognized contingent TRA liability through Other, net, in the Condensed Consolidated Statements of Operations. As a result of the Company’s release of the valuation allowance against the related deferred tax assets during the three and six months ended June 30, 2026, the Company concluded that future payments related to the contingent portion of the TRA had become probable and, accordingly, reestablished the previously reversed contingent TRA liability of $6.6 million through Other, net, in the Condensed Consolidated Statements of Operations. In addition, for applicable exchanges of Class A LLC Units that occurred after the contingent TRA liability was reversed in a prior year, the Company recorded additional TRA obligations of $1.8 million at the gross undiscounted amount of the expected future payments, with increases to the TRA liability and related deferred tax assets and offsets to additional paid-in capital.
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