Genie Energy Ltd. Income Taxes Disclosure

Note 13 — Income Taxes

 

Restatement in the income taxes account relate to the unwinding of the Company's accounting for its captive insurance subsidiary as discussed in Note 1 — Restatement of Previously Issued Financial Statements.

 

The components of income before income taxes are as follows:

 

		Year ended December 31,
(in thousands)			2025				2024				2023
						(As Restated)				(As Restated)
Domestic		$	37,425			$	53,971			$	63,176
Foreign			(1,284	)			(490	)			20
INCOME BEFORE INCOME TAXES		$	36,141			$	53,481			$	63,196

 

Significant components of the Company’s deferred income tax assets consist of the following:

 

		December 31,
(in thousands)			2025				2024
						(As Restated)
Deferred income tax assets (liabilities):
Net operating loss		$	10,117			$	10,013
Accrued expenses			2,453				2,136
Bad debt reserve			2,141				2,183
Lease liability			222				528
Stock options and restricted stock			1,021				1,607
Unrealized gain			226				239
State taxes			35				23
Amortization			(3,110	)			(363	)
ROU assets			(204	)			(491	)
Total deferred income tax assets			12,901				15,875
Valuation allowance			(10,592	)			(10,252	)
DEFERRED INCOME TAX ASSETS, NET		$	2,309			$	5,623

 

The Company recognizes a valuation allowance against deferred tax assets to the extent that it believes that the deferred tax assets are not more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. 

 

The provision for (benefit from) income taxes consists of the following:

 

		Year ended December 31,
(in thousands)			2025				2024				2023
						(As Restated)				(As Restated)
Current:
Federal		$	1,911			$	12,755			$	10,790
State and local			3,037				3,806				4,452
			4,948				16,561				15,242
Deferred:
Federal			3,414				(1,389	)			842
Foreign			(170	)			—				—
State and local			70				186				538
			3,314				(1,203	)			1,380
PROVISION FOR INCOME TAXES		$	8,262			$	15,358			$	16,622

 

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, 2025
		Amount				Percent
		(in thousands)
U.S. federal income tax benefit at statutory rate		$	7,590				21.0	%
State and local income tax, net of federal benefit			2,335				6.5
Foreign tax effect			—				—
Effect of cross border tax laws			—				—
Valuation allowance			501				1.4
Non taxable items:
Stock-based compensation			588				1.7
Permanent difference			12				—
Warrants			—				—
Tax credit:
Solar credits			(5,312	)			(14.7	)
Penalty and interest			2,930				8.1
Others			(327	)			(1.2	)
Changes in unrecognized tax benefits:
Unrecognized tax benefits			(55	)			0.2
Balance at end of period		$	8,262				23.0	%

 

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 thousands)			2024				2023
		(As Restated)				(As Restated)
U.S. federal income tax benefit at statutory rate		$	11,231			$	13,271
State and local income tax, net of federal benefit			3,165				3,931
Penalty and interests			1,616				226
Valuation allowance			183				(159	)
Stock-based compensation			(197	)			(812	)
Others			(640	)			165
PROVISION FOR INCOME TAXES		$	15,358			$	16,622

 

The Company includes certain entities that are not included in the Company’s consolidated tax return. The entities have separate U.S. federal and state net operating loss carry-forwards of $37.9 million that begin to expire in 2025. Net operating loss carry-forwards in the amount of $34.0 million related to Prism may be subject to Internal Revenue Code Section 382 limitation at the time of utilization. 

 

The change in the valuation allowance for deferred income taxes was as follows: 

 

		Balance at beginning of period				Additions charged to costs and expenses				Deductions				Balance at end of period
		(in thousands)
Year ended December 31, 2025
Reserves for valuation allowances deducted from deferred income taxes, net		$	10,252			$	340			$	—			$	10,592
Year ended December 31, 2024
Reserves for valuation allowances deducted from deferred income taxes, net		$	10,069			$	183			$	—			$	10,252
Year ended December 31, 2023
Reserves for valuation allowances deducted from deferred income taxes, net		$	10,228			$	—			$	(159	)		$	10,069

 

As of December 31, 2025 and 2024, the Company maintained a valuation allowance on the deferred tax assets of net operating losses relating to consolidated U.S. entities and its Israel entity.

 

The table below summarizes the change in the balance of unrecognized income tax benefits:

 

		Year ended December 31,
		2025				2024
		(in thousands)
Balance at beginning of period		$	111			$	183
Additions based on tax positions related to the current period			56				18
Additions based on tax positions related to prior periods			—				—
Lapses of statutes of limitations			—				(90	)
Balance at end of period		$	167			$	111

 

All of the unrecognized income tax benefits at December 31, 2025, 2024 and 2023 would have affected the Company’s effective income tax rate if recognized. The Company expects the total amount of unrecognized income tax benefits to significantly decrease within the next twelve months. 

 

In the years ended December 31, 2025, 2024 and 2023, the Company recorded interest and penalty expenses of $2.9 million, $1.6 million and $0.2 million, respectively, and have included the amounts in income taxes payable.

 

The Company currently remains subject to examinations of its tax returns as follows: U.S. federal tax returns for 2022 to 2025, state and local tax returns generally for 2020 to 2025 and foreign tax returns generally for 2012 to 2025.

 

The amounts of cash income taxes paid by the Company for the year ended December 31, 2025 were as follows (in thousands):

 

Federal		$	4,800
State and local
Connecticut			475
New York			475
Pennsylvania			325
Others			920
Income Taxes, net of amounts refunded		$	6,995