v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
ISQ Open Infrastructure Company LLC - Series II [Member]  
Income Taxes [Line Items]  
INCOME TAXES
10. INCOME TAXES

 

Series II operates so that it qualifies to be treated as a partnership for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended, and not as a publicly traded partnership taxable as a corporation. As such, it is not subject to any U.S. federal and state income taxes.

 

Series II holds certain equity investments in taxable subsidiaries (the “Taxable Subsidiaries”). The Taxable Subsidiaries permit Series II to hold equity investments in Infrastructure Assets which are “pass through” entities for tax purposes. The Taxable Subsidiaries are not consolidated with Series II for income tax purposes and may generate income tax expense, or benefit, and the related tax assets and liabilities, as a result of the Taxable Subsidiaries’ ownership of certain Infrastructure Assets in the United States.

 

Income (loss) before tax expense (benefit) includes the following components:

 

   For the
Six Months
Ended
June 30,
2026		   For the
period from
March 28,
2025
(Funding Date)
to
June 30,
2025		 
Income (loss) before income taxes:        
Total income (loss) before income taxes  $11,540,085   $
-
 

 

Series II incurs income tax expense (benefit) related to its holdings of certain equity investments in Taxable Subsidiaries. The components of the provision for (benefit from) income taxes are as follows:

 

   For the
Six Months
Ended
June 30,
2026		   For the
period from
March 28,
2025
(Funding Date)
to
June 30,
2025		 
Deferred:        
Federal Income Tax  $2,458,326   $
-
 
State and Local Income Tax   97,088    
-
 
   $2,555,414   $
-
 
Current:          
Federal Income Tax  $144,458   $
-
 
State and Local Income Tax   44,560    
-
 
   $189,018   $
-
 
           
Total Income Tax Provision (Benefit)  $2,744,432   $
-
 

The following table reconciles the U.S. federal statutory tax rate to the effective income tax rate:

 

   For the
Six Months
Ended
June 30,
2026		 
U.S. Partnership Federal Statutory Tax Rate   
-
%
Income taxes at federal corporate tax rate   22.55%
State and Local Income Taxes (net of federal tax)   1.23%
Effective Income Tax Rate   23.78%

 

The following table represents significant components of Series II’s deferred tax assets and liabilities:

 

   For the
Six Months
Ended
June 30,
2026		   For the
period from
March 28,
2025
(Funding Date)
to
June 30,
2025		 
Deferred Tax Asset  $
    -
   $
               -
 
Unrealized Appreciation (Depreciation)  $
-
   $
-
 
           
Deferred Tax Liability  $11,288,835   $
-
 
Current Tax Payable  $39,016   $
-
 
Unrealized Appreciation (Depreciation)  $11,327,851   $
-
 

 

In evaluating the appropriateness of accruing tax assets, Series II assesses whether it is more likely than not that some portion, or all, of the deferred tax assets, will be realized. Series II considers, among other things, the generation of future taxable income (including reversals of deferred tax assets) during the periods in which the related temporary differences will become deductible.

 

Tax Contingencies

 

Series II files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, Series II is subject to examination by U.S. federal and certain state, local and foreign tax regulators. As of June 30, 2026 and December 31, 2025, tax years including and after 2025 are subject to examinations by the tax authorities.