APARTMENT INVESTMENT & MANAGEMENT CO Income Taxes Disclosure
Note 7 — Income Taxes
Deferred income taxes are provided for the change in temporary differences between the basis of certain assets and liabilities for financial reporting purposes and income tax reporting purposes. The expected future tax rates are based upon enacted tax laws. Significant components of our deferred tax liabilities and assets as of December 31, 2025 and 2024 are as follows (in thousands):
|
|
As of December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Real estate and real estate partnership basis differences(1) |
|
$ |
1,891 |
|
|
$ |
101,833 |
|
Lease liability - finance lease |
|
|
82 |
|
|
331 |
|
|
Deferred tax assets: |
|
|
|
|
|
|
||
Right-of-use lease asset - finance lease |
|
|
296 |
|
|
|
338 |
|
Other |
|
|
2,048 |
|
|
|
3,059 |
|
Net operating, capital, and other loss carryforwards |
|
|
15,970 |
|
|
|
10,251 |
|
Valuation allowance for deferred tax assets |
|
|
(16,341 |
) |
|
|
(7,766 |
) |
Net deferred tax (asset) liability |
|
$ |
— |
|
|
$ |
96,282 |
|
(1) The significant decrease in real estate and real estate partnership basis differences during the year ended December 31, 2025, is primarily due to the sale of the Brickell Assemblage and the removal of the deferred tax liability that arose from the corporate structure used to complete the acquisition of 1001 Brickell.
Significant components of income tax (benefit) expense including any interest and penalties related to income taxes are as follows for the years ended December 31, 2025, 2024, and 2023 (in thousands):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
38,853 |
|
|
$ |
314 |
|
|
$ |
463 |
|
State |
|
|
364 |
|
|
|
226 |
|
|
|
(3,813 |
) |
Total current |
|
|
39,217 |
|
|
|
540 |
|
|
|
(3,350 |
) |
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(91,524 |
) |
|
|
(9,845 |
) |
|
|
(7,182 |
) |
State |
|
|
(5,288 |
) |
|
|
(1,766 |
) |
|
|
(2,220 |
) |
Total deferred |
|
|
(96,812 |
) |
|
|
(11,611 |
) |
|
|
(9,402 |
) |
Total income tax (benefit) expense |
|
$ |
(57,595 |
) |
|
$ |
(11,071 |
) |
|
$ |
(12,752 |
) |
Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and gains retained by the REIT. For the years ended December 31, 2025, 2024, and 2023, we had consolidated net losses subject to tax of $33.1 million, $28.2 million, and $15.2 million, respectively.
For the year ended December 31, 2025, we recognized income tax benefit from continuing operations of $57.6 million, compared to income tax benefit of $11.1 million for the same period in 2024. The year-to-year change is due primarily to the removal of the deferred tax liability that arose in the original acquisition of 1001 Brickell offset by the actual income taxes associated with the gain on sale of the asset.
The reconciliation of income tax attributable to operations computed at the United States statutory rate to income tax benefit recognized for the year ended December 31, 2025, in accordance with the guidance in ASU 2023-09, is shown below (in thousands):
|
|
2025 |
|
|||||
|
|
Amount |
|
|
Percent |
|
||
Tax (benefit) expense at United States statutory rates on consolidated income or loss subject to tax |
|
$ |
(6,944 |
) |
|
|
21.0 |
% |
(1) |
|
|
(4,925 |
) |
|
|
14.9 |
% |
Effect of cross-border tax laws (2) |
|
|
|
|
|
|
||
FDAP |
|
|
1,021 |
|
|
|
(3.1 |
%) |
FIRPTA |
|
|
37,832 |
|
|
|
(114.4 |
%) |
Effect of transaction |
|
|
(89,929 |
) |
|
|
272.0 |
% |
Changes in valuation allowances |
|
|
5,492 |
|
|
|
(16.6 |
%) |
Other |
|
|
(142 |
) |
|
|
0.4 |
% |
Total income tax (benefit) expense |
|
$ |
(57,595 |
) |
|
|
174.2 |
% |
(1) State taxes in Florida made up the majority (greater than 50%) of the tax effect in this category.
(2) The effect of the cross-border taxes primarily reflect income taxes incurred in conjunction with the sale of 1001 Brickell, offset by the removal of the deferred tax liability that arose in its original acquisition. The FDAP and FIRPTA amounts payable are included within Accrued liabilities and other within our Consolidated Balance Sheets.
The reconciliation of income tax attributable to continuing operations computed at the United States statutory rate to income tax benefit recognized for the years ended December 31, 2024 and 2023, in accordance with the guidance prior to the adoption of ASU 2023-09, is shown below (in thousands):
|
|
2024 |
|
|
2023 |
|
||||||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||
Tax (benefit) expense at United States statutory rates on consolidated income or loss subject to tax |
|
$ |
(5,929 |
) |
|
|
21.0 |
% |
|
$ |
(3,189 |
) |
|
|
21.0 |
% |
United States income tax on earnings of foreign subsidiary |
|
|
(4,171 |
) |
|
|
14.8 |
% |
|
|
(3,101 |
) |
|
|
20.4 |
% |
State income tax, net of federal (benefit) expense |
|
|
(1,580 |
) |
|
|
5.6 |
% |
|
|
(8,320 |
) |
|
|
54.8 |
% |
Effects of permanent differences |
|
|
(2,781 |
) |
|
|
9.9 |
% |
|
|
96 |
|
|
|
(0.6 |
%) |
Valuation allowance |
|
|
3,472 |
|
|
|
(12.3 |
%) |
|
|
2,270 |
|
|
|
(14.9 |
%) |
Other |
|
|
(82 |
) |
|
|
0.2 |
% |
|
|
(508 |
) |
|
|
3.3 |
% |
Total income tax (benefit) expense |
|
$ |
(11,071 |
) |
|
|
39.2 |
% |
|
$ |
(12,752 |
) |
|
|
84.0 |
% |
Income taxes paid totaled approximately $0.9 million and $1.7 million for the years ended December 31, 2024 and 2023, respectively. Below is a summary of income taxes paid, net of refunds, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 (in thousands):
|
|
2025 |
|
|
Income taxes paid, net of refunds: |
|
|
|
|
Federal |
|
$ |
551 |
|
Florida |
|
|
133 |
|
Illinois |
|
|
(200 |
) |
Other states |
|
|
14 |
|
Total income taxes paid, net of refunds |
|
$ |
498 |
|
At December 31, 2025, we had federal and state net operating loss carryforwards (“NOLs”), for which the deferred tax asset was approximately $16.0 million, before a valuation allowance of $16.0 million. The NOLs expire in the years ended 2033 to 2045. Subject to certain separate return limitations, we may use these NOLs to offset a portion of taxable income generated by our TRS entities.
For income tax purposes, dividends paid to holders of Common Stock primarily consist of ordinary income, capital gains, qualified dividends, unrecaptured Section 1250 gains, or a combination thereof. For the years ended December 31, 2025, 2024, and 2023, tax attributes of dividends per share held for the entire year were estimated to be as follows (unaudited):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||||||||||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||||
Ordinary income |
|
$ |
— |
|
|
|
0.0 |
% |
|
$ |
— |
|
|
|
0.0 |
% |
|
$ |
— |
|
|
|
0.0 |
% |
Capital gains |
|
|
1.88 |
|
|
|
66.3 |
% |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
Qualified dividends |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
Unrecaptured § 1250 gain |
|
|
0.95 |
|
|
|
33.7 |
% |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
Return of capital |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
Balance at December 31, |
|
$ |
2.83 |
|
|
|
100.0 |
% |
|
$ |
— |
|
|
|
0.0 |
% |
|
$ |
— |
|
|
|
0.0 |
% |
Because the statute of limitations has not yet elapsed, our United States federal income tax returns for the year ended December 31, 2022, and subsequent years and certain of our state income tax returns for the year ended December 31, 2022, and subsequent years are currently subject to examination by the IRS or other taxing authorities. If recognized, the unrecognized tax benefits would affect our effective tax rate.
A reconciliation of the beginning and ending balance of our unrecognized tax benefits is presented below and is included in Accrued liabilities and other in our Consolidated Balance Sheets (in thousands):
|
|
2025 |
|
|
2024 |
|
||
Balance at January 1, |
|
$ |
1,974 |
|
|
$ |
2,092 |
|
Additions based on tax positions in prior years |
|
|
47 |
|
|
|
47 |
|
Lapse of applicable statute of limitations |
|
|
— |
|
|
|
(165 |
) |
Balance at December 31, |
|
$ |
2,021 |
|
|
$ |
1,974 |
|
In accordance with the accounting requirements for stock-based compensation, we may recognize tax benefits in connection with the exercise of stock options by employees of our TRS entities and the vesting of restricted stock awards.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2019 | Feb 24, 2020 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.