CaliberCos Inc.CWD
CaliberCos Inc. Income Taxes Disclosure
Note 10 – Income Taxes
The following table shows the components of the income tax provision (benefit) from total operations for the years ended December 31, 2024 and 2023 (in thousands):
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Current income tax provision (benefit) | |||||||||||
| Federal | $ | — | $ | — | |||||||
| State | — | — | |||||||||
| Total | — | — | |||||||||
| Deferred income tax provision (benefit) | |||||||||||
| Federal | (4,023) | (2,887) | |||||||||
| State | (708) | (451) | |||||||||
| Total | (4,731) | (3,338) | |||||||||
| Adjustment to valuation allowance | 4,731 | 3,338 | |||||||||
| Total income tax provision (benefit) | $ | — | $ | — | |||||||
The following table reconciles the U.S. federal statutory tax rate to the effective income tax rate for the years ended December 31, 2024 and 2023:
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| U.S. federal statutory tax rate | 21.0 | % | 21.0 | % | |||||||
| State taxes, net of federal benefit | 3.7 | % | 3.6 | % | |||||||
| Income passed through to noncontrolling interest, federal tax | (1.7) | % | (11.3) | % | |||||||
| Income passed through to noncontrolling interest, state tax | (0.3) | % | (2.0) | % | |||||||
| Permanent differences, VIEs | (0.1) | % | (0.8) | % | |||||||
| Prior period return-to-provision adjustments | 0.0 | % | 1.9 | % | |||||||
| Nondeductible expenses | (0.5) | % | (0.3) | % | |||||||
| Change in valuation allowance | (22.1) | % | (12.1) | % | |||||||
| Effective income tax rate | 0.0 | % | 0.0 | % | |||||||
The following table summarizes the components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 (in thousands):
| December 31, 2024 | December 31, 2023 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 17,837 | $ | 13,632 | |||||||
| Sec 362 basis Step-up | 439 | 439 | |||||||||
| Deferred compensation | 1,929 | 1,780 | |||||||||
| Fixed assets | 17 | — | |||||||||
| Employee stock based compensation | 1,299 | 820 | |||||||||
| Allowance for doubtful accounts | 1,018 | — | |||||||||
| Realized gain/loss on investments | 1,001 | — | |||||||||
| Other | 682 | 1,769 | |||||||||
| Total deferred tax assets | 24,222 | 18,440 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Passthrough income/loss from partnerships | (12,196) | (9,399) | |||||||||
| Fixed assets | — | (447) | |||||||||
| Other | (323) | (1,622) | |||||||||
| Total deferred tax liabilities | (12,519) | (11,468) | |||||||||
| Valuation allowance | (11,703) | (6,972) | |||||||||
| Net deferred tax assets | $ | — | $ | — | |||||||
As of December 31, 2024, the Company had approximately $72.3 million and $71.3 million of federal and state net operating losses (“NOL”), respectively, available to offset future taxable income. As of December 31, 2023, the Company had approximately $59.5 million and $59.8 million of federal and state NOL, respectively, available to offset future taxable income. The federal NOLs arising in 2017 and prior, if not utilized, begin expiring in the year 2035. Federal NOLs arising in tax years ending after December 31, 2017 can be carried forward indefinitely but are subject to an 80% of taxable income limitation. The Arizona state NOLs arising in 2015, if not utilized, begin expiring in the year 2035. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s federal NOL carryovers may be limited in the event of a change in control of ownership.
In assessing the need for a valuation allowance against its net deferred tax assets, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, the Company considered cumulative tax losses as a significant piece of negative evidence and established a full valuation allowance of $11.7 million and $7.0 million against the Company’s net deferred tax assets as of December 31, 2024 and 2023, respectively.
The changes to the Company’s valuation allowance during the years ended December 31, 2024 and 2023 were as follows (in thousands):
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Valuation allowance at the beginning of the year | $ | 6,972 | $ | 3,634 | |||||||
| Changes in valuation allowance recorded during the year | 4,731 | 3,338 | |||||||||
| Valuation allowance at the end of the year | $ | 11,703 | $ | 6,972 | |||||||
The Company and its subsidiaries are subject to the following significant taxing jurisdictions: U.S., Alaska, Arizona, California, Colorado, Florida, Missouri, Oregon, and Texas. The Company is currently not under income tax examination in any tax jurisdiction.
Although we believe our tax returns are correct, the final determination of tax examinations and any related litigation could be different from what was reported on the tax returns. We are currently open to audit under the statute of limitations by the United States Internal Revenue Service as well as state taxing authorities for the past four years (three years in some states). However, due to NOL carryforwards not being utilized, all periods are open to potential examinations. Any penalties and interest related to unrecognized tax benefits would be classified as income tax expense in the accompanying consolidated statements of operations.
We apply U.S. GAAP related to accounting for uncertainty in income taxes, which prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. We do not believe that there are any positions taken by the Company which would require recognition or disclosure in these financial statements for the years ended December 31, 2024 and 2023.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 31, 2025 | Showing above |
| 2023 | Apr 16, 2024 | |
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.