Five Point Holdings, LLCFPH
Five Point Holdings, LLC Income Taxes Disclosure
INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for the years in which taxes are expected to be paid or recovered.
Upon formation, the Holding Company elected to be treated as a corporation for U.S. federal, state, and local tax purposes. All operations are carried on through the Holding Company’s subsidiaries, the majority of which are pass-through entities that are generally not subject to federal or state income taxation, as all of the taxable income, gains, losses, deductions, and credits are passed through to the partners. The Holding Company is responsible for income taxes on its allocable share of the Operating Company’s income or gain.
The (provision) benefit for income taxes for the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current income tax expense: | |||||||||||||||||
Federal | $ | (97) | $ | (48) | $ | (12) | |||||||||||
State | (7,382) | (3,051) | (9) | ||||||||||||||
| Total current income tax expense | (7,479) | (3,099) | (21) | ||||||||||||||
| Deferred income tax (expense) benefit: | |||||||||||||||||
Federal | $ | (19,321) | $ | (18,667) | $ | (8,982) | |||||||||||
State | (2,125) | (5,696) | (4,139) | ||||||||||||||
| Total deferred income tax (expense) benefit | (21,446) | (24,363) | (13,121) | ||||||||||||||
| Decrease (increase) in valuation allowance | — | — | 17,625 | ||||||||||||||
| Expiration of unused loss carryforwards | — | — | (65) | ||||||||||||||
| (Provision) benefit for income taxes | $ | (28,925) | $ | (27,462) | $ | 4,418 | |||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant temporary differences are as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Net operating loss carryforward | $ | 143,015 | $ | 160,386 | |||||||
| Tax receivable agreement | 50,802 | 48,530 | |||||||||
| Other | 3,726 | 1,667 | |||||||||
| Valuation allowance | — | — | |||||||||
| Total deferred tax assets | 197,543 | 210,583 | |||||||||
| Deferred tax liabilities-investments in subsidiaries | (255,886) | (244,153) | |||||||||
| Deferred tax liability, net | $ | (58,343) | $ | (33,570) | |||||||
A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if based on the available evidence, it is more likely than not that such assets will not be realized. In the continual assessment of the requirement for a valuation allowance, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses; forecasts of future profitability; the duration of statutory carryforward periods; the Holding Company’s experience with loss carryforwards not expiring unused; and tax-planning alternatives. The amount of the valuation allowance recorded against the deferred tax asset could be adjusted if there are changes to the positive and negative factors discussed above. Based upon the review of all positive and negative evidence, the Holding Company had no valuation allowance recorded as of December 31, 2025.
At December 31, 2025, the Holding Company had federal tax effected net operating loss (“NOL”) carryforwards totaling $103.1 million, and state tax effected NOL carryforwards, net of federal income tax benefit, totaling $39.9 million. Federal NOLs incurred prior to 2018 and California NOLs may be carried forward up to 20 years to offset future taxable income and begin to expire in 2029. Federal NOLs incurred in 2018 and forward do not expire. The Company also has federal tax credits of $1.7 million that begin to expire in 2042.
The Internal Revenue Code generally limits the availability of NOLs if an ownership change occurs within any three-year period under Section 382. If the Holding Company were to experience an ownership change of more than 50%, the use of all NOLs (and potentially other built-in losses) would generally be subject to a limitation equal to the value of the Holding Company’s equity before the ownership change, multiplied by the long-term tax-exempt rate. The Holding Company estimates that after giving effect to various transactions by members who hold a 5% or greater interest in the Holding Company, it has not experienced an ownership change as computed in accordance with Section 382. In the event of an ownership change, the Holding Company’s use of the NOLs may be limited and not fully available for realization.
With regard to the TRA (see Note 12), the Holding Company has established a liability for the payments considered probable and estimable that would be required under the TRA based upon, among other things, the book value of its assets. This liability is not currently recognized for tax purposes and will give rise to tax deductions as payments are made. Accordingly, a deferred tax asset has been reflected for the net effect of this temporary difference.
A reconciliation of the statutory rate and the effective tax rate for 2025, 2024 and 2023 is as follows (in thousands, except rate percentages):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| US federal statutory tax rate | $ | (44,616) | 21.00 | % | $ | (43,070) | 21.00 | % | $ | (22,953) | 21.00 | % | |||||||||||||||||||||||
State and local income taxes-net of federal income tax effect(1) | (7,510) | 3.53 | (6,894) | 3.36 | (3,288) | 3.01 | |||||||||||||||||||||||||||||
| Tax credits | 1,124 | (0.53) | 559 | (0.27) | — | — | |||||||||||||||||||||||||||||
| Changes in valuation allowances | — | — | — | — | 17,560 | (16.07) | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| Pass-through to noncontrolling interests | 23,637 | (11.12) | 22,823 | (11.13) | 12,248 | (11.21) | |||||||||||||||||||||||||||||
| Other | (1,198) | 0.56 | (848) | 0.49 | (815) | 0.75 | |||||||||||||||||||||||||||||
| Other adjustments | |||||||||||||||||||||||||||||||||||
| Other | (362) | 0.17 | (32) | 0.02 | 1,666 | (1.52) | |||||||||||||||||||||||||||||
| (Provision) benefit for income taxes/Effective tax rate | $ | (28,925) | 13.61 | % | $ | (27,462) | 13.47 | % | $ | 4,418 | (4.04) | % | |||||||||||||||||||||||
(1) State taxes in California made up the majority (greater than 50%) of the tax effect in this category.
At December 31, 2025 and 2024, the Holding Company did not have any gross unrecognized tax benefits, and did not require an accrual for interest or penalties.
The Holding Company files income tax returns in the U.S. federal jurisdiction and in the state of California. As a result of tax net operating losses incurred by the Holding Company for the years ended December 31, 2009 through December 31, 2024, the Holding Company is subject to U.S. federal, state, and local examinations by tax authorities for the years beginning 2009 through 2024. The Company is not currently under examination by any tax authority. The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense. The Company has concluded that there were no significant uncertain tax positions requiring recognition in its financial statements, nor has the Company been assessed interest or penalties by any major tax jurisdictions related to any open tax periods.
On July 4, 2025, H.R.1, the One Big Beautiful Bill Act, was signed into law, which includes a broad range of tax reform provisions affecting businesses. There was no material impact on the Company’s consolidated financial statements as a result of the legislation for the for the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Mar 4, 2024 | |
| 2022 | Mar 6, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 10, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2018 | Mar 14, 2019 | |
| 2017 | Mar 30, 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.