APi Group CorpAPG
APi Group Corp Income Taxes Disclosure
INCOME TAXES
For the years ended December 31, 2025, 2024, and 2023, the components of income before income taxes are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. earnings | $ | 251 | $ | 177 | $ | 186 | |||||||||||
| Foreign earnings | 162 | 153 | 46 | ||||||||||||||
| Total earnings | $ | 413 | $ | 330 | $ | 232 | |||||||||||
The income tax provision for the years ended December 31, 2025, 2024, and 2023, consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 21 | $ | 47 | $ | 48 | |||||||||||
| State | 20 | 14 | 23 | ||||||||||||||
| Foreign | 56 | 46 | 40 | ||||||||||||||
| Total current tax provision | $ | 97 | $ | 107 | $ | 111 | |||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | $ | 33 | $ | (15) | $ | (10) | |||||||||||
| State | 2 | — | (1) | ||||||||||||||
| Foreign | (21) | (12) | (21) | ||||||||||||||
| Total deferred tax benefit | $ | 14 | $ | (27) | $ | (32) | |||||||||||
| Total: | |||||||||||||||||
| U.S. federal | $ | 54 | $ | 32 | $ | 38 | |||||||||||
| State | 22 | 14 | 22 | ||||||||||||||
| Foreign | 35 | 34 | 19 | ||||||||||||||
| Total income tax provision | $ | 111 | $ | 80 | $ | 79 | |||||||||||
The Company has elected to prospectively adopt the guidance in ASU No, 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures. The reconciliation of the federal statutory income tax rate to the Company's provision for income taxes for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 is as follows:
| Year Ended December 31, 2025 | |||||||||||
| U.S. federal statutory tax rate | $ | 87 | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect(1) | 18 | 4.4 | % | ||||||||
| Foreign tax effects | |||||||||||
| United Kingdom | |||||||||||
| Other permanent differences | (4) | (1.0) | % | ||||||||
| Other adjustments | (2) | (0.5) | % | ||||||||
| Other foreign jurisdictions | 6 | 1.5 | % | ||||||||
| Effect of cross-border tax laws | |||||||||||
| Cross-border financing arrangement | (6) | (1.5) | % | ||||||||
| Other | 1 | 0.2 | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Section 162(m) limitation | 6 | 1.5 | % | ||||||||
| Other adjustments | 5 | 1.3 | % | ||||||||
| Total provision for income taxes | $ | 111 | 26.9 | % | |||||||
(1) State taxes in Minnesota, New Jersey, Illinois, Wisconsin, and Tennessee made up the majority (greater than 50%) of the tax effect in this category.
The reconciliation of the federal statutory income tax rate to the Company’s provision for income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 is as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Expected provision at statutory federal rate | $ | 70 | 21.0 | % | $ | 49 | 21.0 | % | ||||||||||||||||||
| State tax provision, net of federal benefit | 11 | 3.3 | % | 17 | 7.3 | % | ||||||||||||||||||||
| Foreign rate differential | (3) | (0.9 | %) | (1) | (0.4 | %) | ||||||||||||||||||||
| Valuation allowance | (5) | (1.5 | %) | 8 | 3.4 | % | ||||||||||||||||||||
| Permanent differences and other | 3 | 0.9 | % | 3 | 1.3 | % | ||||||||||||||||||||
| Transaction costs | 1 | 0.3 | % | — | — | % | ||||||||||||||||||||
| Section 162(m) limitation | 3 | 0.9 | % | 3 | 1.3 | % | ||||||||||||||||||||
| Total provision for income taxes | $ | 80 | 24.0 | % | $ | 79 | 33.9 | % | ||||||||||||||||||
The income taxes paid for the year ended December 31, 2025 consisted of the following:
| Year Ended December 31, 2025 | |||||
| U.S. federal | $ | 42 | |||
| State | 20 | ||||
| Australia | 9 | ||||
| Canada | 7 | ||||
| France | 14 | ||||
| Hong Kong | 8 | ||||
| United Kingdom | 6 | ||||
| Other foreign | 5 | ||||
| Total | $ | 111 | |||
The components of deferred tax assets and liabilities consisted of the following:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Operating and finance lease liabilities | $ | 45 | $ | 68 | |||||||
| Accrued compensation | 43 | 42 | |||||||||
| Accrued expenses | 32 | 27 | |||||||||
| Net operating loss carryforwards | 17 | 22 | |||||||||
| Contingent consideration and compensation liabilities | 9 | 14 | |||||||||
| Capital loss carryforwards | 55 | 51 | |||||||||
| Credits | 40 | 37 | |||||||||
| Reserves and allowances | 4 | 6 | |||||||||
| Interest limitation | 29 | 36 | |||||||||
| Derivatives | 1 | — | |||||||||
| Other | 14 | 7 | |||||||||
| Gross deferred tax assets | 289 | 310 | |||||||||
| Valuation allowances | (107) | (92) | |||||||||
| Net deferred tax assets | $ | 182 | $ | 218 | |||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation on fixed assets | $ | 41 | $ | 39 | |||||||
| Goodwill | 69 | 44 | |||||||||
| Amortization on identified intangible assets | 174 | 177 | |||||||||
| Operating lease right-of-use assets | 43 | 67 | |||||||||
| Derivatives | — | 7 | |||||||||
| Deferred payments | 3 | 3 | |||||||||
| Pension and post-retirement obligations | 15 | 16 | |||||||||
| Other | 2 | 6 | |||||||||
| Gross deferred tax liabilities | $ | 347 | $ | 359 | |||||||
| Net deferred tax liabilities | $ | 165 | $ | 141 | |||||||
Deferred income tax assets represent potential future income tax benefits. Realization of these assets is ultimately dependent upon future taxable income. Deferred tax assets must be reduced by a valuation allowance if, based on all available evidence, it is considered more likely than not that some or all of the recorded deferred tax assets will not be realized in a future period. The Company considers all negative and positive evidence, including the weight of the evidence, to determine if a valuation allowance is required. As of December 31, 2025 and 2024, valuation allowances of $107 and $92 were recorded against certain deferred tax assets of the Company’s domestic and foreign subsidiaries.
As of December 31, 2025, the Company had gross federal, state and foreign net operating loss carryforwards of approximately $1, $20, and $70, respectively, foreign capital loss carryforwards of $220, and foreign credit carryforwards of $40. The state net operating loss carryforwards have carryforward periods of to twenty years and begin to expire in 2029. The foreign attributes generally have carryforward periods of twenty years, which begin to expire in 2026, or can be carried forward indefinitely, subject to utilization rules.
As of December 31, 2025, there were accumulated undistributed earnings of subsidiaries outside of the United States, all of which are considered to be indefinitely reinvested. Due to the complexity of the legal entity structure, the number of legal entities and jurisdictions involved, and the complexity of the laws and regulations, the Company believes it is not practicable to estimate the amount of additional taxes which may be payable upon distribution of these undistributed
earnings. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes on permanent reinvested earnings.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Gross unrecognized tax benefits at the beginning of the year | $ | 9 | $ | 7 | $ | 8 | |||||||||||
| Additions for tax positions taken in a prior period (including acquired uncertain tax positions) | — | 3 | — | ||||||||||||||
| Reductions for tax positions taken in a prior period (including acquired uncertain tax positions) | — | (1) | (1) | ||||||||||||||
| Additions for tax positions taken in the current period | — | — | 1 | ||||||||||||||
| Reductions for tax positions due to lapse in statute of limitations | — | — | (1) | ||||||||||||||
| Gross unrecognized tax benefits as of the end of the year | $ | 9 | $ | 9 | $ | 7 | |||||||||||
The Company’s liability for unrecognized tax benefits is recorded within other noncurrent liabilities on the consolidated balance sheets and recognizes interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes in the consolidated statements of operations. The Company had $4 and $3 of accrued gross interest and penalties as of December 31, 2025 and 2024, respectively. During the years ended December 31, 2025, 2024, and 2023, the Company did not recognize net interest expense.
As of December 31, 2025, $12 of unrecognized tax benefit would impact the Company’s effective tax rate, if recognized.
The Company files income tax returns in the U.S. federal jurisdiction, and various state, local and foreign jurisdictions. As of December 31, 2025, with few exceptions, neither the Company nor its subsidiaries are subject to examination. There are various other audits in state and foreign jurisdictions. The IRS exam related to the 2019 final S Corporation return has been closed without adjustments.
On July 4, 2025, the “One Big Beautiful Bill Act” was enacted into law. The legislation includes several changes to federal tax law including permanent extension of certain expiring Tax Cuts and Jobs Act provisions and modifications to US taxation of foreign activity. Certain provisions were effective for 2025, while others will be effective for tax years beginning after December 31, 2025. The Company has evaluated the impact of the legislation and incorporated the applicable tax provisions into its consolidated financial statements for the current reporting period.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 24, 2021 | |
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.