Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Income Taxes | |
| Income Taxes | 12. Income Taxes For the three and nine months ended September 30, 2026, the Company recorded an income tax benefit of $16.2 million and $15.7 million, representing effective tax rates of 19.4% and 16.6%, respectively. The income tax benefit is primarily attributable to a U.S. taxable loss generated by one-time transaction-related costs, partially offset by income tax expense in Canada, Israel, and India, where taxable income could not be fully offset by available tax loss carryforwards. The Company recorded a $0.1 Million tax expense for the three and nine months ended September 30, 2025, as a full valuation allowance was maintained against the deferred tax assets of Real due to a history of cumulative losses. The variance between the Company’s effective tax rates and the U.S. federal statutory rate for the 2026 and 2025 periods was primarily driven by the jurisdictional mix of earnings and losses, as well as this valuation allowance, which remains specific to Real and does not apply to the newly acquired U.S. operations. In connection with the Transaction, on August 24, 2026, that certain Tax Receivable Agreement, dated as of October 7, 2013 (the “RIHI TRA”), by and between REMAX and RIHI, Inc., a Delaware corporation, was terminated with no payments made thereunder, and the associated liability was derecognized. On September 30, 2026, the Company terminated the remaining tax receivable agreement with Parallaxes Rain Co-Investment, LLC (the “Parallaxes TRA” and, together with the RIHI TRA, the “TRAs”). Pursuant to the termination of the Parallaxes TRA, the Company paid $7.1 million in full settlement of all outstanding and future obligations. As of September 30, 2026, the Company has no further obligations under the TRA. Valuation Allowance The Company evaluates the realizability of its deferred tax assets under ASC 740 by considering all available positive and negative evidence. The objective negative evidence from the legacy Company’s three-year cumulative pre-tax loss, driven primarily by the U.S. Settlement Agreement (see Note 14, Commitments and Contingencies), outweighed positive evidence, including forecasts of future profitability. Accordingly, the Company maintains a full valuation allowance against the legacy business’s U.S. net deferred tax assets. This valuation allowance is limited to the legacy Company; no valuation allowance was recorded against deferred tax assets attributable to the acquired business. As of September 30, 2026, the legacy business expects to remain in a three-year cumulative loss position, and the Company recorded a $0.9 million decrease in the related valuation allowance. |