BeneficientBENF

Beneficient Income Taxes Disclosure

10-KFiled Sep 29, 20253 min read
Income Taxes
The components of income tax expense (benefit) for the years ended March 31, 2025 and 2024, were as follows:
Year Ended March 31,
(Dollars in thousands)20252024
Current provision expense (benefit)
Federal$— $— 
State and local
80 — 
Deferred provision expense (benefit)
Federal$6,370 $788 
State and local
743 — 
Valuation allowance
(7,113)— 
Income tax expense (benefit)
$80 $788 
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 11.07% and negative 0.03% for the years ended March 31, 2025 and 2024, respectively, are shown below:
Year Ended March 31,
(Dollars in thousands)20252024
Expected statutory income tax expense (benefit)
$(152)$(558,052)
Amounts not deductible for income tax - goodwill impairment
775 490,969 
Amounts not deductible for income tax - other
1,448 4,919 
Amounts attributable to non-taxable flow-through entities5,122 2,445 
Return to provision adjustment
3,201 410 
Change in valuation allowance(10,314)60,097 
Income tax expense
$80 $788 
Certain prior year items have been reclassified to conform with current year presentation.
The components of gross deferred tax assets and gross deferred tax liabilities as of March 31, 2025 and 2024, are as follows (included in other assets):
(Dollars in thousands)March 31, 2025March 31, 2024
Deferred income tax assets:
Passthrough differences - temporary$30,112 $28,130 
Loss on arbitration— 11,544 
Share-based compensation
4,089 4,567 
Net operating loss24,296 17,658 
Other
163 — 
Non-current deferred income tax assets58,660 61,899 
Deferred income tax liabilities:
Other— — 
Non-current deferred income tax liabilities— — 
Less: valuation allowance58,660 61,899 
Total deferred income tax liability$— $— 
As of March 31, 2025 and 2024, our gross federal and state net operating loss carryforwards for income tax purposes were approximately $114.2 million and $82.4 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, 2024 is a decrease of $3.2 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, 2025 and 2024.
The Company does not have any significant uncertain tax positions as of March 31, 2025 and 2024, and the 2021, 2022, 2023 and 2024 tax years remain subject to examination by major tax jurisdictions as of the date of this report.

Historical Timeline

Fiscal YearFiled
2025Sep 29, 2025Showing above
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