INCOME TAXES |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2026 | |||
| Income Tax Disclosure [Abstract] | |||
| INCOME TAXES |
Buda Juice, Inc. is a corporation for U.S. federal income tax purposes, incorporated in the State of Delaware. Prior to its conversion to a C-corporation on January 1, 2026, the Company operated as a limited liability company treated as a partnership for U.S. federal and state income tax purposes. Accordingly, its income tax liabilities and/or benefits were passed through to its unitholders, except for Texas, where the Company was subject to the Texas margin (franchise) tax.
The Company recognized income tax expense of $488 and $18 for the six months ended June 30, 2026 and 2025, respectively. The effective tax rates for the six months ended June 30, 2026 and 2025 were 36.23% and 0.90%, respectively. The Company’s federal and state statutory tax rate, net of the federal benefit, was approximately 21%. The variance between the Company’s effective tax rate and the statutory tax rate was primarily attributable to the discrete recognition of deferred tax expense on January 1, 2026, upon the Company’s conversion to a C-corporation.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. At December 31, 2025, the Company did not have any deferred tax balances due to its treatment as a pass-through entity. Effective January 1, 2026, the Company recorded a deferred tax liability of approximately $182, primarily related to book and tax differences in fixed assets upon conversion to a C-corporation. For the three months ended June 30, 2026, the Company was in a cumulative income position and projects net income for the full year 2026. In addition, there are no deferred tax assets subject to expiration. Therefore, the Company did not record a valuation allowance against its net deferred tax assets as of June 30, 2026. The Company will continue to assess the realizability of its deferred tax assets.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes provisions such as immediate expensing of domestic research and experimental expenditures and 100% bonus depreciation for certain qualified property. The Company evaluated the impact of the OBBBA provisions on its income tax provision and overall tax position and determined that the impact primarily relates to timing differences and is not material to the Company’s financial statements. |