Apollo Commercial Real Estate Finance, Inc. Income Taxes Disclosure
Note 12 – Income Taxes
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2009. As a REIT, U.S. federal income tax law generally requires us to distribute annually at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that we pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We are also subject to U.S. federal, state, and local income taxes on our domestic taxable REIT subsidiaries ("TRS") based on the tax jurisdictions in which they operate.
During the years ended December 31, 2025, 2024 and 2023, we recorded a current income tax provision of $0.3 million, $0.4 million, and $0.4 million, respectively, related to activities of our taxable REIT subsidiaries.
There was a $0.2 million, $0.3 million, and $0.6 million income tax asset related to the operating activities of our TRS entities as of December 31, 2025, December 31, 2024, and December 31, 2023, respectively. As of December 31, 2025, December 31, 2024, and December 31, 2023, there were no material deferred tax assets or liabilities.
As of December 31, 2025, we had net operating losses of $6.2 million and capital losses of $25.2 million that may be carried forward for use in subsequent periods.
As of December 31, 2025, tax years 2021 through 2024 remain subject to examination by taxing authorities.
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.