Douglas Elliman Inc.DOUG
Douglas Elliman Inc. Income Taxes Disclosure
INCOME TAXES
The amounts provided for income taxes were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. Federal | $ | 1,883 | $ | — | $ | — | |||||||||||
| State and local | 1,677 | 140 | 391 | ||||||||||||||
| 3,560 | 140 | 391 | |||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. Federal | — | (108) | (10,009) | ||||||||||||||
| State and local | — | 1,085 | (5,435) | ||||||||||||||
| — | 977 | (15,444) | |||||||||||||||
| Total | $ | 3,560 | $ | 1,117 | $ | (15,053) | |||||||||||
The following is a reconciliation of the difference between the U.S. statutory federal income tax rate and our effective tax rate:
Year Ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
U.S. Federal Statutory Tax Rate | $ | 3,752 | 21.00 | % | |||||||
State and local income taxes, net of federal income tax effect (1) | 1,325 | 7.43 | % | ||||||||
| Changes in Valuation Allowance | (10,330) | (57.81) | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Compensation related items | 1,053 | 5.91 | % | ||||||||
| Nondeductible settlement | 840 | 4.71 | % | ||||||||
| Net income attributable NCI in DE | 191 | 1.09 | % | ||||||||
| Non-deductible portion of convertible debt premium | 7,849 | 43.94 | % | ||||||||
| Other | (302) | (1.81) | % | ||||||||
| Other adjustments | (818) | (4.54) | % | ||||||||
| Effective Income Tax Rate | $ | 3,560 | 19.92 | % | |||||||
_____________________________
(1) State and local income taxes in New York and New York City made up the majority (more than 50%) of the domestic state and local income taxes.
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal statutory tax rate | 21 | % | 21 | % | |||||||
| State taxes, net of federal benefit | 0.88 | % | 7.22 | % | |||||||
| Changes in valuation allowances | (22.2) | % | — | % | |||||||
| Nontaxable or nondeductible items | (1.6) | % | (1.8) | % | |||||||
| Other | — | % | (1.44) | % | |||||||
| Effective tax rate | (1.92) | % | 24.98 | % | |||||||
Income Taxes Paid
The table below presents amounts of income taxes paid, net of refunds, by jurisdiction:
Year Ended December 31, 2025 | |||||
| U.S. Federal | $ | — | |||
| U.S. State and local | 156 | ||||
| Total U.S. | 156 | ||||
| Foreign | — | ||||
| Total cash income taxes paid, net of refunds | $ | 156 | |||
The consolidated balance sheets of the Company include deferred income tax assets and liabilities, which represent temporary differences in the application of accounting rules established by GAAP and income tax laws. The tax effect of temporary differences which give rise to a significant portion of deferred tax assets and liabilities is as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Basis differences on fixed and intangible assets | $ | 669 | $ | 577 | |||||||
| Basis differences in Notes Payable | — | 4,509 | |||||||||
| Various U.S. federal and state tax loss carryforwards | 17,183 | 28,457 | |||||||||
| Operating lease liabilities | 3,778 | 4,764 | |||||||||
| 21,630 | 38,307 | ||||||||||
| Less: Valuation allowance | (10,177) | (26,065) | |||||||||
| Net deferred tax assets | $ | 11,453 | $ | 12,242 | |||||||
| Deferred tax liabilities: | |||||||||||
| Basis differences on prepaid assets | $ | (195) | $ | (200) | |||||||
| Revenue recognition | (345) | (377) | |||||||||
| Allowance for doubtful accounts | (82) | (67) | |||||||||
| Basis differences on acquisition | (8,008) | (7,769) | |||||||||
| Operating lease right-of-use assets | (3,279) | (4,181) | |||||||||
| Other | 456 | 352 | |||||||||
| Net deferred tax liabilities | $ | (11,453) | $ | (12,242) | |||||||
| Net deferred tax assets (liabilities) | $ | — | $ | — | |||||||
Various U.S. federal and state net operating loss (“NOL”) carryforwards included in Deferred Tax Assets. Prior to 2019, the Company’s subsidiary, Douglas Elliman of California, Inc. (“DE California”), filed a consolidated U.S. income tax return that included its wholly owned U.S. subsidiaries. The tax effected standalone subsidiary federal and state NOL carryforwards attributable to DE California is $7,328 and $7,093 at December 31, 2025 and 2024, respectively. The deferred tax assets of Douglas Elliman of California, Inc. generated prior to March 1, 2019 are limited for use in the future to the extent of the taxable income of Douglas Elliman of California, Inc. under the “Separate Return Limitation Year” rules of Internal Revenue Code Section 381.The federal NOL carryforwards begin to expire in 2034 and losses generated in 2018 or later will carry forward indefinitely.
At December 31, 2025, the Company’s tax effected consolidated federal NOL carryforward was approximately $13,270 and tax effected consolidated state NOL carryforward was approximately $3,913. At December 31, 2024, the Company’s tax effected consolidated federal NOL carryforward was approximately $20,414 and tax effected consolidated state NOL carryforward was approximately $8,043. (The NOL carryforwards of DE California are included in the Company’s tax effected federal and state NOL carryforwards at December 31, 2025 and 2024, respectively).
Valuation Allowances. ASC 740, Income Taxes, requires the Company to establish a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all the deferred tax assets will not be realized. If such determination is made and future losses are incurred over the
period in which the net deferred tax assets are deductible, the Company believes it will be more likely than not that the benefits of these deductible differences will not be realized, and as a result will be required to maintain a valuation allowance for the full amount of the deferred tax assets.
In assessing the realizability of the net deferred tax assets, the Company considers all relevant positive and negative evidence to determine whether it is more likely than not that some portion of the deferred income tax will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to expiration of the net operation loss carryforwards. At December 31, 2025 and 2024, the Company has recorded a full valuation allowance against its net deferred tax assets of approximately $10,177 and $26,065, respectively. The change in the valuation allowance during the year ended 2025 was approximately $15,888.
At December 31, 2025, the Company had federal net operation loss (“NOL”) carryforwards of approximately $63,189. The federal NOL carryforwards begin to expire in 2034, losses generated in 2018 or later of approximately $55 million will carry forward indefinitely. Sections 382 and 383 of the Internal Revenue Code of 1986 (the “Code”) subject the future utilization of NOL carryforwards and certain other tax attributes, such as research and experimental tax credits, to an annual limitation in the event of certain ownership changes, as defined. The effect of an ownership change would be the imposition of an annual limitation of the use of NOL carryforwards attributable to periods before the change. The amount of the annual limitation depends upon the value of the Company immediately before the change, changes to the Company's capital during a specified period prior to the change, and the federal published interest rate. The Company does not believe that the utilization of these NOLs has been limited by these provisions.
Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2025, there were no uncertain positions. The Company's U.S. federal and state net operating losses have occurred since 2014 and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did not have any unrecognized tax benefits and has not accrued any interest or penalties for the years ended December 31, 2025 and 2024.
During the year ended December 31, 2024, the Company evaluated its history of cumulative losses over the three previous years and determined it was more likely than not that its deferred tax assets would not be utilized. Therefore, at December 31, 2024, the Company has recorded a full valuation allowance against its net deferred tax assets of approximately $26,065. The change in valuation allowance during the year ended December 31, 2024 was $19,039.
The Company files U.S. and state and local income tax returns in jurisdictions with varying statutes of limitations. Liabilities for uncertain tax positions reflected as of December 31, 2025 and 2024 were not significant and it is not anticipated that they will materially change in the next 12 months. Although the outcome of tax audits is always uncertain, Douglas Elliman Realty, LLC believes that its tax positions will be sustained under audit.
On July 4, 2025, President Donald J. Trump signed into law the legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” and commonly referred to as the One Big Beautiful Bill (“OBBBA”). The Company does not expect OBBBA to have a material impact on the Company’s financial statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 31, 2022 | |
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.