BeneficientBENF

Beneficient Income Taxes Disclosure

10-KFiled Jun 30, 20263 min read
Income Taxes
The components of income tax expense (benefit) for the years ended March 31, 2026 and 2025, were as follows:
Year Ended March 31,
(Dollars in thousands)20262025
Current provision expense (benefit)
Federal$7 $— 
State and local
207 80 
Deferred provision expense (benefit)
Federal$35,860 $6,370 
State and local
105 743 
Valuation allowance
(35,965)(7,113)
Income tax expense (benefit)
$214 $80 
Income tax expense differs from the amounts computed by applying the Federal statutory rate to pre-tax income (loss). A reconciliation between the Federal statutory income tax rate of 21% to the effective income tax rate of negative 0.13% and negative 11.07% for the years ended March 31, 2026 and 2025, respectively, are shown below:
Year Ended
March 31, 2026
(Dollars in thousands)Amount% of Earnings (Loss) before Tax
Earnings before income taxes (EBT)$(164,516)
US federal tax(34,548)21.00 %
State and local income taxes, net of federal income tax effect
Texas164 (0.10)%
Changes in valuation allowance35,964 (21.86)%
Nontaxable or nondeductible items
Goodwill and intangible assets impairment651 (0.40)%
Warrant/conversion derivative(1,977)1.20 %
Other48 (0.02)%
Other adjustments(88)0.05 %
Effective tax rate$214 (0.13)%
(Dollars in thousands)Year Ended
March 31, 2025
Expected statutory income tax expense (benefit)$(152)
Amounts not deductible for income tax - goodwill impairment775 
Amounts not deductible for income tax - other1,448 
Amounts attributable to non-taxable flow-through entities5,122 
Return to provision adjustment3,201 
Change in valuation allowance(10,314)
Income tax expense$80 
The components of gross deferred tax assets and gross deferred tax liabilities as of March 31, 2026 and 2025, are as follows (included in other assets):
(Dollars in thousands)March 31, 2026March 31, 2025
Deferred income tax assets:
Passthrough differences - temporary$46,840 $30,112 
Loss on arbitration14,289 — 
Share-based compensation
4,400 4,089 
Net operating loss28,578 24,296 
Other
517 163 
Non-current deferred income tax assets94,624 58,660 
Deferred income tax liabilities:
Other— — 
Non-current deferred income tax liabilities— — 
Less: valuation allowance94,624 58,660 
Total deferred income tax liability$— $— 
As of March 31, 2026 and 2025, our gross federal and state net operating loss carryforwards for income tax purposes were approximately $134.2 million and $114.2 million, respectively. Under the Tax Act, federal net operating loss carryforwards can be carried forward indefinitely but the deduction for federal net operating loss is limited to 80% of taxable income for any given year. The Company’s state net operating losses can generally be carried forward indefinitely but the deduction for state net operating loss is generally limited to 80% of taxable state income for any given year. The change in the valuation allowance from March 31, 2025 is an increase of $36.0 million.
The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred over the past three years and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of March 31, 2026 and 2025.
As of March 31, 2026, certain consolidated subsidiaries have not filed certain income tax returns, including partnership returns for certain consolidated entities, for fiscal years 2024 and 2025. Management is working to complete and file the delinquent returns. The ultimate amount of taxes, interest, and penalties, if any, could differ from amounts recorded. The Company cannot presently estimate the range of reasonably possible additional loss, if any, associated with these matters.
The Company does not have any significant uncertain tax positions as of March 31, 2026 and 2025, and the 2022, 2023, 2024, and 2025 tax years remain subject to examination by major tax jurisdictions as of the date of this report.
Free Sentinel

Want the next Beneficient income taxes disclosure the moment it drops?

Set a Sentinel and we'll alert you the moment Beneficient's next filing hits EDGAR. No credit card, your email never gets sold.

Track for free

Historical Timeline

Fiscal YearFiled
2026Jun 30, 2026Showing above
2025Sep 29, 2025
2024Jul 9, 2024
2023Jul 13, 2023

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.

Other Available Disclosures

RevenueEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesSegmentsDebtCommitmentsStock CompensationNew StandardsPay vs Performance