Brookdale Senior Living Inc.BKD
Brookdale Senior Living Inc. Income Taxes Disclosure
17. Income Taxes
The benefit (provision) for income taxes is comprised of the following:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax benefit (provision): | |||||||||||||||||
| U.S. federal | $ | 80 | $ | 122 | $ | (183) | |||||||||||
| U.S. state and local | (1,417) | (1,151) | (1,011) | ||||||||||||||
| Total current tax benefit (provision) | (1,337) | (1,029) | (1,194) | ||||||||||||||
| Deferred tax benefit (provision): | |||||||||||||||||
| U.S. federal | 2,511 | (3,617) | (7,590) | ||||||||||||||
U.S. state and local(1) | 777 | — | — | ||||||||||||||
| Total deferred tax benefit (provision) | 3,288 | (3,617) | (7,590) | ||||||||||||||
| Total income tax benefit (provision) | $ | 1,951 | $ | (4,646) | $ | (8,784) | |||||||||||
(1) Prior to the adoption of ASU 2023-09 prospectively for the year ended December 31, 2025, U.S. state and local deferred tax benefit (provision) was presented within the U.S. federal amount.
Reconciliations of the benefit (provision) for income taxes to the amount computed at the U.S. federal statutory tax rate of 21% are as follows.
| For the Year Ended December 31, 2025 | ||||||||
| (in thousands) | Amount | Percent of pre-tax loss | ||||||
| U.S. federal statutory tax rate | $ | 55,575 | 21.0 | % | ||||
U.S. state and local taxes, net of U.S. federal income tax(1) | (640) | (0.2) | % | |||||
| Tax credits | (485) | (0.2) | % | |||||
| Changes in U.S. federal income tax valuation allowance | (48,690) | (18.4) | % | |||||
| Nontaxable or nondeductible items: | ||||||||
| Officers' compensation | (3,342) | (1.3) | % | |||||
| Other | 171 | 0.1 | % | |||||
| Changes in unrecognized tax benefits | 67 | — | % | |||||
| Other adjustments | (705) | (0.3) | % | |||||
| Effective income tax rate | $ | 1,951 | 0.7 | % | ||||
(1) State taxes in Texas comprised the majority of this category.
| For the Years Ended December 31, | ||||||||
| (in thousands) | 2024 | 2023 | ||||||
| Tax benefit (provision) at U.S. statutory rate | $ | 41,431 | $ | 37,848 | ||||
| U.S. state and local taxes, net of U.S. federal income tax | 5,125 | 5,766 | ||||||
| Valuation allowance | (47,345) | (49,109) | ||||||
| Convertible debt repurchase premium | (2,745) | — | ||||||
| Stock compensation | (83) | (1,312) | ||||||
| Other | (1,029) | (1,977) | ||||||
| Total | $ | (4,646) | $ | (8,784) | ||||
Income taxes paid (net of refunds received) consisted of the following:
| (in thousands) | For the Year Ended December 31, 2025 | ||||
| Texas | $ | 997 | |||
| Oregon | 395 | ||||
| All other states | 45 | ||||
| Total income taxes paid (net of refunds) | $ | 1,437 | |||
Significant components of the Company's deferred tax assets and liabilities are as follows.
| As of December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred income tax assets: | |||||||||||
| Operating loss carryforwards | $ | 489,929 | $ | 426,454 | |||||||
| Operating lease obligations | 300,713 | 322,612 | |||||||||
| Tax credits | 49,883 | 50,367 | |||||||||
| Accrued expenses | 44,337 | 47,467 | |||||||||
| Financing lease obligations | — | 29,524 | |||||||||
| Intangible assets | 5,537 | 17,103 | |||||||||
| Investment in unconsolidated ventures | 2,943 | 3,322 | |||||||||
| Capital loss carryforward | 167 | — | |||||||||
| Other | — | 97 | |||||||||
| Total gross deferred income tax asset | 893,509 | 896,946 | |||||||||
| Valuation allowance | (578,225) | (521,497) | |||||||||
| Net deferred income tax assets | 315,284 | 375,449 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Operating lease right-of-use assets | (259,117) | (284,594) | |||||||||
| Property, plant and equipment | (48,955) | (100,459) | |||||||||
| Financing lease obligations | (9,401) | — | |||||||||
| Other | (4,127) | — | |||||||||
| Total gross deferred income tax liability | (321,600) | (385,053) | |||||||||
| Net deferred tax asset (liability) | $ | (6,316) | $ | (9,604) | |||||||
A reconciliation of the beginning and ending amounts of the deferred tax valuation allowance is as follows:
| Year Ended | Balance at beginning of period | Charged to deferred income tax (benefit) provision | Balance at end of period | |||||||||||||||||
| December 31, 2023 | $ | 425,043 | $ | 49,109 | (1) | $ | 474,152 | |||||||||||||
| December 31, 2024 | $ | 474,152 | $ | 47,345 | (1) | $ | 521,497 | |||||||||||||
| December 31, 2025 | $ | 521,497 | $ | 56,728 | (1) | $ | 578,225 | |||||||||||||
(1) Increase to valuation allowance for U.S. federal and state net operating losses and credits.
As of both December 31, 2025 and 2024, the Company had federal net operating loss carryforwards generated in 2017 and prior of approximately $790.8 million, which are available to offset future taxable income from 2026 through 2037. Additionally, as of December 31, 2025 and 2024, the Company had federal net operating loss carryforwards generated after 2017 of $1.2 billion and $0.9 billion, respectively, which have an indefinite life, but with usage limited to 80% of taxable income in any given year. The Company had federal and state capital loss carryforwards of $0.7 million as of December 31, 2025. The Company determined that a valuation allowance was required after consideration of the Company's estimated future reversal of existing timing differences as of December 31, 2025 and 2024. The Company does not consider estimates of future taxable income in its determination due to the existence of cumulative historical operating losses. The Company's valuation allowance as of December 31, 2025 and 2024 was $578.2 million and $521.5 million, respectively.
The Company has recorded valuation allowances of $528.2 million and $471.1 million against its federal and state net operating losses as of December 31, 2025 and 2024, respectively. The Company has recorded a valuation allowance against its federal and state capital loss carryforward of $0.1 million as of December 31, 2025. The Company also recorded a valuation allowance against federal and state credits of $49.9 million and $50.4 million as of December 31, 2025 and 2024, respectively.
As of December 31, 2025 and 2024, the Company had gross tax affected unrecognized tax benefits of $18.0 million and $18.1 million, respectively, which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations and would affect the annual effective tax rate. Interest and penalties related to these tax positions are classified as tax expense in the Company's consolidated financial statements. Total interest and penalties reserved is $0.2 million as of both December 31, 2025 and 2024. As of December 31, 2025, the Company's tax returns for years 2021 through 2024 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination.
A reconciliation of the unrecognized tax benefits is as follows.
| For the Years Ended December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Balance at beginning of period | $ | 18,101 | $ | 18,205 | |||||||
| Reductions for tax positions related to prior years | (69) | (104) | |||||||||
| Balance at end of period | $ | 18,032 | $ | 18,101 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 15, 2017 | |
| 2015 | Feb 12, 2016 | |
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.