Gogo Inc. Income Taxes Disclosure

15. Income Tax

In addition to the Deferred income taxes on the consolidated balance sheets, the Company has a deferred tax liability of $1.5 million and $4.7 million related to foreign entities included in Other non-current liabilities as of December 31, 2025 and 2024, respectively. Components of the net deferred income tax asset as of December 31, 2025 and 2024 are as follows (in thousands):

We regularly assess the need for a valuation allowance related to our deferred income tax assets to determine, based on the weight of all available positive and negative evidence, whether it is more likely than not that some or all of such deferred assets will not be realized. In our assessments, the Company considers recent financial operating results, the scheduled expiration of our net operating losses, future taxable income, the reversal of existing taxable differences, and tax planning strategies. Based on our most recent assessment, as of December 31, 2025 and 2024, the Company had valuation allowances of $17.0 million and $23.2 million, respectively, against its deferred tax assets. The Company’s valuation allowance decreased by $6.2 million. The decrease primarily related to the expiration of an unused U.S. federal and state capital loss tax attributes, partially offset by the establishment of a valuation allowance on state net operating loss carryforwards. Management believes the remaining deferred tax assets are more likely than not to be realized based on the weight of available positive and negative evidence.

The valuation allowances pertain to foreign and state net operating losses. Management believes it is more likely than not that these deferred tax assets will not be realized as of December 31, 2025. If our current operating performance continues, further reversals of our valuation allowance could occur within the next twelve months.

As of December 31, 2025, the federal net operating loss (“NOL”) carryforward, state NOL carryforward and Canadian NOL carryforward were approximately $259 million, $304 million, and $57 million, respectively. We have recorded a deferred tax asset of $54.4 million, $18.4 million, and $15.2 million for federal NOLs, state NOLs, and foreign NOLs, respectively, reflecting the benefit of these loss carryforwards. The federal and state NOLs begin to expire in 2035 and 2027, respectively. The Canadian NOL carryforward begins to expire in 2034.

Uncertain Tax Positions - As of December 31, 2025 and 2024, the total amount of gross unrecognized tax benefits was $2.0 million and $1.7 million, respectively.

We are subject to taxation and file income tax returns in the United States federal jurisdiction, various states and several foreign jurisdictions including, but not limited to, Canada, Switzerland, United Kingdom, Australia, Brazil and Singapore. With few exceptions, as of December 31, 2025, we are no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2010.

The total amount of unrecognized tax benefits that, if recognized, would reduce the Company’s effective tax rate is $2.0 million and $1.7 million as of December 31, 2025 and 2024, respectively. We record penalties and interest relating to uncertain tax positions in the income tax provision line item in the consolidated statement of operations. No penalties or interest related to uncertain tax positions were recorded for the years ended December 31, 2025, 2024 or 2023.

All undistributed earnings, to the extent there are any, will remain permanently reinvested to support existing working capital needs in the international subsidiaries. The Company has not provided for deferred taxes on outside basis differences for investments in its international subsidiaries that are unrelated to unremitted earnings as these basis differences will be indefinitely reinvested. The amount of unrecognized deferred tax liability does not have a material impact on the financial statements.