Falcon's Beyond Global, Inc. Income Taxes Disclosure
The Income (loss) before income taxes consisted of:
|
|
Year ended |
|
|||||
|
|
December 31, |
|
|
December 31, |
|
||
Income (loss) before income taxes |
|
|
|
|
|
|
||
United States |
|
$ |
(18,113 |
) |
|
$ |
147,364 |
|
Foreign |
|
|
24,423 |
|
|
|
2,119 |
|
|
|
$ |
6,310 |
|
|
$ |
149,483 |
|
The income tax benefit (expense) benefit consisted of:
|
|
Year ended |
|
|||||
|
|
December 31, |
|
|
December 31, |
|
||
Current |
|
|
|
|
|
|
||
Federal |
|
$ |
2 |
|
|
$ |
(1 |
) |
State |
|
|
— |
|
|
|
— |
|
Foreign |
|
|
— |
|
|
|
(1 |
) |
Deferred |
|
|
|
|
|
|
||
Federal |
|
|
— |
|
|
|
— |
|
State |
|
|
— |
|
|
|
— |
|
Foreign |
|
|
— |
|
|
|
— |
|
Income tax benefit (expense) |
|
$ |
2 |
|
|
$ |
(2 |
) |
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate pursuant to the disclosure requirements of ASU 2023-09 applied prospectively is as follows:
|
|
Year ended December 31, |
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|||||
|
|
2025 |
|
|||||
Statutory federal income tax rate |
|
$ |
1,325 |
|
|
|
21.0 |
% |
Noncontrolling Interests |
|
|
(729 |
) |
|
|
(11.6 |
)% |
Valuation allowance |
|
|
(615 |
) |
|
|
(9.7 |
)% |
Florida state taxes |
|
|
123 |
|
|
|
1.9 |
% |
Foreign tax effects: |
|
|
|
|
|
|
||
Spain valuation allowance |
|
|
15,251 |
|
|
|
241.7 |
% |
Spain statutory tax rate difference |
|
|
2,674 |
|
|
|
42.4 |
% |
Spain non taxable income |
|
|
(18,017 |
) |
|
|
(285.5 |
)% |
Spain other |
|
|
92 |
|
|
|
1.5 |
% |
Other |
|
|
(102 |
) |
|
|
(1.7 |
)% |
Effective tax rate |
|
$ |
2 |
|
|
|
(0.0 |
)% |
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate, prior to adoption of ASU 2023-09, is as follows:
|
|
Year ended December 31, |
|
|
|
|
2024 |
|
|
Statutory federal income tax rate |
|
|
21.0 |
% |
Noncontrolling Interests |
|
|
(17.9 |
)% |
Valuation allowance |
|
|
(3.6 |
)% |
State taxes |
|
|
0.6 |
% |
Effect of foreign operations |
|
|
0.3 |
% |
Other |
|
|
(0.4 |
)% |
Effective tax rate |
|
|
— |
% |
Net deferred tax assets are as follows:
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|
As of |
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|||||
|
|
December 31, |
|
|
December 31, |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Start-up/Organization costs |
|
$ |
1,202 |
|
|
$ |
1,303 |
|
Partnership Investment |
|
|
139,039 |
|
|
|
111,776 |
|
Net operating loss carryforwards |
|
|
26,078 |
|
|
|
1,954 |
|
Other |
|
|
(449 |
) |
|
|
146 |
|
Total deferred tax assets |
|
|
165,870 |
|
|
|
115,179 |
|
Valuation allowance |
|
|
(165,870 |
) |
|
|
(115,179 |
) |
Deferred tax asset, net of allowance |
|
$ |
— |
|
|
$ |
— |
|
Management has reviewed all available evidence, both positive and negative, in determining the need for a valuation allowance with respect to the gross deferred tax assets. In determining the manner in which available evidence should be weighted, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore continued to maintain a full valuation allowance.
As of December 31, 2025 and 2024, respectively, the Company has foreign net operating loss carryforwards of $64.4 million and $1.1 million for tax purposes, which never expire if unused. As of December 31, 2025, the Company has federal and state net operating loss carryforwards of $39.4 million, which also never expire if unused. The Company did not have any foreign tax credit carryforwards, net of valuation allowance.
The Company received a federal tax refund of $0.4 million and paid $0.1 million in income taxes for the years ended December 31, 2025 and 2024, respectively.
There were no unrecognized tax benefits as of December 31, 2025 and 2024. No amounts were accrued for the payment of interest and penalties at December 31, 2025 and 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income in the accompanying consolidated statements of operations and comprehensive income.
In the normal course of business, the Company is subject to examination by U.S. federal and certain state, local and foreign tax regulators. At December 31, 2025, U.S. federal tax returns related to Falcon’s Pubco and Opco entities for the years 2022 through 2024 are generally open under the normal statute of limitations and therefore subject to examination. State and local tax returns of our Falcon’s Pubco and Opco entities are generally open to audit for tax year 2022-2024. In addition, certain foreign subsidiaries’ tax returns from 2016 to 2024 are also open for examination by various regulators. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s consolidated financial statements.
On July 4, 2025, H.R. 1, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14”, commonly referred to as the "One Big Beautiful Bill Act,” was enacted in the United States. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of accelerated fixed asset depreciation and modifications to the international tax framework. We applied the relevant changes to the Company’s income tax provision for the period ended December 31, 2025, which did not materially impact the Company’s consolidated tax position.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 30, 2026 | Showing above |
| 2024 | Apr 3, 2025 | |
| 2023 | Apr 29, 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.