Income Taxes |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Note 7. Income Taxes
For the three months ended March 31, 2026, the Company recorded a consolidated income tax benefit of approximately $7 thousand, primarily related to Canadian income tax. No U.S. federal or state current income tax expense was recorded, and no U.S. deferred tax benefit was recognized because the Company maintains a full valuation allowance against its U.S. deferred tax assets. Under the interim tax provision methodology, tax effects related to ordinary operations are reflected through the estimated annual effective tax rate, while the tax effects of discrete items are recognized in the period in which they occur. During the three months ended March 31, 2026, the Company’s ordinary items and its discrete items, including the sale of its reinsurance business and the sale of digital assets, each resulted in taxable losses; accordingly, no current tax provision was required. In addition, although these losses would otherwise give rise to deferred tax assets, no deferred tax benefit or expense was recognized because such tax attributes remain fully offset by a valuation allowance.
In assessing the realizability of deferred tax assets, the Company 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. The Company considers the scheduled reversal of taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. A cumulative loss in a particular tax jurisdiction in recent years is a significant piece of evidence with respect to the realizability that is difficult to overcome. Based on the available objective evidence, including recent updates to the taxing jurisdictions generating income, the Company concluded that a valuation allowance should be recorded against all of the Company’s U.S. tax jurisdiction deferred tax assets as of March 31, 2026 and December 31, 2025.
A provision of Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was the implementation of the Global Intangible-Low Taxed Income Tax (“GILTI”). The Company has elected to account for the impact of GILTI in the period in which the tax actually applies to the Company. U.S. GAAP does not prescribe a single required approach for GILTI under ASC Topic 740; entities may either recognize deferred taxes for temporary differences expected to reverse as GILTI or treat GILTI as a period cost. During the three months ended March 31, 2026 and March 31, 2025, the Company was in a GILTI tested loss position.
The Tax Code requires U.S. shareholders to include its share of its Controlled Foreign Corporation’s (“CFC”) income from dividends, interest, rents, and various other types of income, called Subpart F Income. During the three months ended March 31, 2026, the Company incurred interest income from its foreign CFCs and is utilizing the high-tax exclusion for purposes of the provision for the three months ended March 31, 2026.
Changes in tax laws may affect recorded deferred tax assets and liabilities and the Company’s effective tax rate in the future. The Company is subject to possible examinations not yet initiated for Federal purposes for the fiscal years 2022 through 2024. The Company is also subject to possible examinations for state and local purposes. In most cases, these examinations in the state and local jurisdictions remain open based on the particular jurisdiction’s statute of limitations. There were no material changes to unrecognized tax benefits during the first quarter of 2026.
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