Cannae Holdings, Inc.CNNE
Cannae Holdings, Inc. Income Taxes Disclosure
Income Taxes
Income tax benefit consists of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Current (benefit) expense | $ | (53.4) | $ | (8.3) | $ | (18.2) | |||||||||||
| Deferred expense (benefit) | 66.4 | 11.6 | (53.3) | ||||||||||||||
| $ | 13.0 | $ | 3.3 | $ | (71.5) | ||||||||||||
A reconciliation of the federal statutory rate to our effective tax rate is as follows:
Year Ended December 31, 2025 | |||||||||||
| Rate | Tax | ||||||||||
| Federal statutory rate | 21.0 | % | $ | (40.0) | |||||||
| State income taxes, net of federal benefit | (0.8) | 1.5 | |||||||||
| Tax credits | 2.0 | (3.8) | |||||||||
| Changes in valuation allowance | (56.5) | 107.6 | |||||||||
| Other non-taxable or non-deductible expenses | (2.3) | 4.5 | |||||||||
| Non-deductible executive compensation | (5.1) | 9.8 | |||||||||
| Other | (0.5) | 0.9 | |||||||||
| Effective tax rate excluding equity investments | (42.2) | % | $ | 80.5 | |||||||
| Equity investments | 35.4 | (67.5) | |||||||||
| Effective tax rate | (6.8) | % | $ | 13.0 | |||||||
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State income taxes, net of federal benefit | 0.1 | (0.3) | |||||||||
| Tax credits | 1.8 | 2.4 | |||||||||
| Valuation allowance | (19.2) | (0.5) | |||||||||
| Non-deductible expenses | (0.3) | (0.2) | |||||||||
| Non-deductible executive compensation | (5.4) | (0.6) | |||||||||
| Dividends received deduction | (0.7) | — | |||||||||
| Noncontrolling interests | (0.5) | (1.1) | |||||||||
| Basis difference in investments | (0.5) | (0.8) | |||||||||
| Unconsolidated affiliate stock-based compensation | (0.7) | (2.5) | |||||||||
| Interest payable | — | (0.1) | |||||||||
| Penalties | — | (0.1) | |||||||||
| Other | 0.4 | (0.1) | |||||||||
| Effective tax rate excluding equity investments | (4.0) | % | 17.1 | % | |||||||
| Equity investments | 2.7 | 18.6 | |||||||||
| Effective tax rate | (1.3) | % | 35.7 | % | |||||||
The significant components of deferred tax assets and liabilities at December 31, 2025 and 2024 consist of the following:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Partnerships | $ | 15.5 | $ | 84.9 | |||||||
| Net operating loss carryforwards | 51.7 | 29.3 | |||||||||
| Tax credit carryforwards | 8.1 | 4.3 | |||||||||
| Stock based compensation | 4.6 | — | |||||||||
| Capital loss carryforwards | 3.8 | — | |||||||||
| Equity investments | 85.4 | — | |||||||||
| Other | 9.0 | 8.2 | |||||||||
| Total gross deferred tax asset | 178.1 | 126.7 | |||||||||
| Less: valuation allowance | (161.6) | (52.8) | |||||||||
| Total deferred tax asset | $ | 16.5 | $ | 73.9 | |||||||
| Deferred tax liabilities: | |||||||||||
| Partnerships | $ | (0.4) | $ | — | |||||||
| Equity investments | $ | (15.5) | $ | — | |||||||
| Total deferred tax liability | $ | (15.9) | $ | — | |||||||
| Net deferred tax asset | $ | 0.6 | $ | 73.9 | |||||||
The Company’s deferred taxes are primarily reflected as the book to tax difference in the Company's ownership of Cannae LLC. The Company, through its direct and indirect interests, holds a 100% ownership percentage of Cannae LLC.
The decrease in our net deferred tax asset as of December 31, 2025 from 2024 is primarily attributable to the tax losses realized on sales of Sightline, System1 and Paysafe shares and the recording of an additional valuation allowance on our remaining federal deferred tax assets.
The Company’s gross federal and state NOL carryforwards were $353.5 million and $244.9 million at December 31, 2025 and 2024, respectively. The federal NOLs carryforward indefinitely and state NOLs expire in various tax years through 2043.
ASC 740 requires that companies assess whether a valuation allowance should be established against their deferred tax assets based on the consideration of all of the available evidence using a "more likely than not" standard. A valuation allowance is established for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets may not be realized. Management evaluated the Company’s deferred tax assets for recoverability using a consistent approach that considers the relative impact of negative and positive evidence, in particular, the Company’s historical profitability and any projections of future taxable income or potential future tax planning strategies. In the year ended December 31, 2025, we recorded an additional valuation allowance of $108.8 million on all of the Company's federal deferred tax assets. As of December 31, 2025 and 2024, the Company had a valuation allowance of $161.6 million and $52.8 million, respectively, related to federal and state NOLs for the tax year ended December 31, 2025 and state NOLs for the tax year ended December 31, 2024, as it is more likely than not that the tax benefit of certain state NOLs will not be realized before the NOLs expire.
Unrecognized tax benefits are recorded for differences between tax positions the Company takes, or expects to take, on its income tax return compared to the benefit recognized for financial statement purposes. The Company does not have any unrecognized tax benefits as of December 31, 2025, 2024 or 2023.
The Company's federal and state income tax returns for the tax years ended December 31, 2025, 2024, 2023 and 2022 remain subject to examination.
See Note P - Supplementary Cash Flow Information for information on cash paid for income taxes. U.S. federal income tax is the only material jurisdiction in which the Company pays, or receives refunds for, income taxes and the only jurisdiction that represents greater than 5% of taxes paid or refunded.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 26, 2018 | |
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.