Emerald Holding, Inc. Income Taxes Disclosure
Note 15. Income Taxes
The Company’s (loss) income before income taxes expense from its United States and foreign operations are as follows:
|
|
Year Ended December 31, |
|
|||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
United States |
|
$ |
10.8 |
|
|
$ |
9.2 |
|
|
$ |
(3.0 |
) |
Foreign |
|
|
(32.4 |
) |
|
|
(1.7 |
) |
|
|
0.1 |
|
Total |
|
$ |
(21.6 |
) |
|
$ |
7.5 |
|
|
$ |
(2.9 |
) |
The Company’s current and deferred income tax provision were as follows:
|
|
Year Ended December 31, |
|
|||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
0.3 |
|
|
$ |
3.3 |
|
|
$ |
2.4 |
|
State and local |
|
|
0.4 |
|
|
|
0.1 |
|
|
|
1.6 |
|
Foreign |
|
|
4.3 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
|
5.0 |
|
|
|
3.5 |
|
|
|
4.0 |
|
Deferred |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
1.6 |
|
|
|
0.8 |
|
|
|
1.8 |
|
State and local |
|
|
1.0 |
|
|
|
0.9 |
|
|
|
(0.5 |
) |
Foreign |
|
|
1.5 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
|
4.1 |
|
|
|
1.8 |
|
|
|
1.3 |
|
Total provision for income taxes |
|
$ |
9.1 |
|
|
$ |
5.3 |
|
|
$ |
5.3 |
|
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
|
|
Year Ended December 31, |
|
|||||
(in millions) |
|
2025 ($) |
|
|
2025 (%) |
|
||
Provision for income taxes at U.S. federal statutory rate |
|
$ |
(4.6 |
) |
|
|
21.0 |
% |
State and local income taxes, net of federal benefit(1) |
|
|
1.1 |
|
|
|
(5.1 |
)% |
Foreign tax effects: |
|
|
|
|
|
|
||
United Kingdom |
|
|
|
|
|
|
||
Foreign rate differential |
|
|
(0.9 |
) |
|
|
4.2 |
% |
Changes in valuation allowance |
|
|
1.1 |
|
|
|
(5.1 |
)% |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
||
Transaction costs and contingent consideration |
|
|
9.1 |
|
|
|
(42.0 |
)% |
RTP - Net Operating Loss |
|
|
(0.3 |
) |
|
|
1.4 |
% |
Other |
|
|
0.3 |
|
|
|
(1.4 |
)% |
Canada |
|
|
|
|
|
|
||
Foreign rate differential |
|
|
(0.4 |
) |
|
|
1.9 |
% |
Provincial tax |
|
|
1.5 |
|
|
|
(6.9 |
)% |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
||
Transaction costs and contingent consideration |
|
|
2.3 |
|
|
|
(10.6 |
)% |
Effect of cross-border tax laws: |
|
|
|
|
|
|
||
Global intangible income inclusion |
|
|
2.6 |
|
|
|
(12.0 |
)% |
Changes in valuation allowances |
|
|
(6.0 |
) |
|
|
27.8 |
% |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
2.9 |
|
|
|
(13.4 |
)% |
Other |
|
|
(0.2 |
) |
|
|
0.9 |
% |
Changes in unrecognized tax benefits |
|
|
0.3 |
|
|
|
(1.4 |
)% |
Other adjustments |
|
|
0.3 |
|
|
|
(1.4 |
)% |
Total tax provision and effective tax rate |
|
$ |
9.1 |
|
|
|
(42.1 |
)% |
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
|
|
Year Ended December 31, |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
(Loss) income before income taxes |
|
$ |
7.5 |
|
|
$ |
(2.9 |
) |
U.S. statutory tax rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
Taxes at the U.S. statutory rate |
|
|
1.6 |
|
|
|
(0.6 |
) |
Tax effected differences |
|
|
|
|
|
|
||
State and local taxes, net of federal benefit |
|
|
0.5 |
|
|
|
0.8 |
|
Share-based payments |
|
|
4.6 |
|
|
|
0.3 |
|
Change in valuation allowance |
|
|
(2.4 |
) |
|
|
3.7 |
|
Return to provision adjustments |
|
|
0.9 |
|
|
|
0.3 |
|
Change in tax rates |
|
|
(0.6 |
) |
|
|
0.5 |
|
Nondeductible expenses |
|
|
0.7 |
|
|
|
0.4 |
|
Other, net |
|
|
— |
|
|
|
(0.1 |
) |
Total provision for income taxes |
|
$ |
5.3 |
|
|
$ |
5.3 |
|
The fluctuations of the Company’s income tax provision and effective tax rates between the years ended December 31, 2025, 2024 and 2023, are primarily attributable to changes in valuation allowances, state taxes, and global intangible low-taxed income inclusion.
The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:
|
|
December 31, |
|
|||||
(in millions) |
|
2025 |
|
|
2024 |
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Net operating loss carryforwards |
|
$ |
4.1 |
|
|
$ |
0.6 |
|
Deferred compensation |
|
|
1.3 |
|
|
|
0.3 |
|
Stock-based compensation |
|
|
4.9 |
|
|
|
5.7 |
|
Fixed asset depreciation |
|
|
1.9 |
|
|
|
1.5 |
|
Lease liabilities |
|
|
2.1 |
|
|
|
2.4 |
|
Accrued expenses |
|
|
0.3 |
|
|
|
0.2 |
|
Section 163(j) interest carryover |
|
|
18.7 |
|
|
|
14.9 |
|
Other assets |
|
|
1.1 |
|
|
|
0.9 |
|
Total deferred tax assets |
|
|
34.4 |
|
|
|
26.5 |
|
|
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Right-of-use lease assets |
|
|
(1.6 |
) |
|
|
(1.6 |
) |
Goodwill and intangible assets |
|
|
(26.3 |
) |
|
|
(0.5 |
) |
Total deferred tax liabilities |
|
|
(27.9 |
) |
|
|
(2.1 |
) |
|
|
|
|
|
|
|
||
Valuation allowance |
|
|
(24.1 |
) |
|
|
(29.3 |
) |
Deferred tax liabilities, net |
|
$ |
(17.6 |
) |
|
$ |
(4.9 |
) |
In assessing the realization of the deferred tax assets, the Company considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. Due to lack of available sources of taxable income, the Company recorded a valuation allowance against a portion of its net deferred tax assets as sufficient uncertainty exists regarding the future realization of these assets. As of December 31, 2025 and 2024, the Company recorded a valuation allowance of $24.1 million and $29.3 million, respectively. The decrease in the valuation allowance was due to book-to-tax differences related to goodwill and intangible assets and stock-based compensation, which were offset by Section 163(j) interest carryover.
As of December 31, 2025 and 2024, the Company had U.S. federal net operating loss carryforwards on a gross-basis of $12.4 million and zero, respectively. As of December 31, 2025 and 2024, the Company had U.S. state net operating loss carryforwards on a gross-basis of $15.7 million and $6.3 million, respectively. The U.S. state net operating loss carryforward begins to expire in 2026. The Company does not have any income tax credit carryforwards.
The following table summarizes the changes to the gross unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023:
|
|
December 31, |
|
|||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Gross unrecognized tax benefits, beginning of period |
|
$ |
1.5 |
|
|
$ |
— |
|
|
$ |
— |
|
Decreases related to prior year tax positions |
|
|
(0.3 |
) |
|
|
— |
|
|
|
— |
|
Increases related to current year tax positions |
|
|
1.4 |
|
|
|
1.5 |
|
|
|
— |
|
Gross unrecognized tax benefits, end of period |
|
$ |
2.6 |
|
|
$ |
1.5 |
|
|
$ |
— |
|
For the years ended December 31, 2025, 2024 and 2023, interest and penalties were not significant. The Company records interest and penalties on unrecognized tax benefits within the provision for income taxes in the consolidated statements of (loss) income.
As of December 31, 2025, the Company has $2.6 million of unrecognized tax benefits, which is included within other noncurrent liabilities in the consolidated balance sheets. As of December 31, 2025, none of the unrecognized tax benefits would impact the effective income tax rate if recognized.
The Company is subject to U.S. federal income tax and various state, local and foreign taxes in numerous jurisdictions. The Company’s federal tax returns for years remain open for examination by the IRS. In most cases, the Company’s state tax returns for remain open and are subject to income tax examinations by state taxing authorities.
The amount of cash income taxes paid by the Company was as follows:
|
|
Year Ended December 31, |
|
|
(in millions) |
|
2025 |
|
|
US Federal |
|
$ |
4.0 |
|
State and local |
|
|
|
|
Colorado |
|
|
(0.3 |
) |
Foreign |
|
|
|
|
United Kingdom |
|
|
0.7 |
|
Canada |
|
|
0.3 |
|
South Africa |
|
|
0.3 |
|
Total cash paid for income taxes, net of refunds |
|
$ |
5.0 |
|
The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 was $4.6 million and $6.9 million, respectively.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 5, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 22, 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.