LENNAR CORP /NEW/LEN
LENNAR CORP /NEW/ Income Taxes Disclosure
Income Taxes
The provision for income taxes consisted of the following:
| For the Years Ended November 30, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 473,890 | 863,867 | 1,037,229 | |||||||||||||
| State | 154,378 | 292,960 | 271,752 | ||||||||||||||
| $ | 628,268 | 1,156,827 | 1,308,981 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | 61,885 | 48,080 | (53,474) | |||||||||||||
| State | 15,410 | 12,346 | (14,494) | ||||||||||||||
| 77,295 | 60,426 | (67,968) | |||||||||||||||
| $ | 705,563 | 1,217,253 | 1,241,013 | ||||||||||||||
A reconciliation of the statutory rate and the effective tax rate was as follows:
| Percentage of Pretax Income | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Statutory rate | 21.00 | % | 21.00 | % | 21.00 | % | |||||||||||
| State income taxes, net of federal income tax benefit | 4.94 | 4.74 | 4.09 | ||||||||||||||
| Tax credits | (1.87) | (1.85) | (1.48) | ||||||||||||||
| Tax reserves and interest expense, net | — | (0.01) | — | ||||||||||||||
| Deferred tax asset valuation allowance, net | — | — | (0.01) | ||||||||||||||
| Other | 0.10 | (0.24) | 0.36 | ||||||||||||||
| Non-deductible loss on Millrose Properties, Inc. exchange offer | 1.18 | — | — | ||||||||||||||
| Effective rate | 25.35 | % | 23.64 | % | 23.96 | % | |||||||||||
On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was enacted, introducing various changes to U.S. federal tax law. The Act did not have a material impact on the Company's consolidated financial statements for the year ended November 30, 2025.
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 that give rise to the net deferred tax assets were as follows:
| At November 30, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Inventory valuation adjustments | $ | 26,212 | 22,979 | ||||||||
| Reserves and accruals | 188,983 | 198,753 | |||||||||
| Net operating loss carryforwards | 38,245 | 43,894 | |||||||||
| Capitalized expenses | 226,114 | 244,198 | |||||||||
| Investments in unconsolidated entities | 47,505 | 62,395 | |||||||||
| Employee stock incentive plan | 35,734 | 49,655 | |||||||||
| Other assets | 23,347 | 39,011 | |||||||||
| Total deferred tax assets | 586,140 | 660,885 | |||||||||
| Valuation allowance | (2,546) | (2,593) | |||||||||
| Total deferred tax assets after valuation allowance | 583,594 | 658,292 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Capitalized expenses | 175,401 | 170,557 | |||||||||
| Deferred income | 209,642 | 181,145 | |||||||||
| Unrealized gains on investments in equity securities | 33,513 | 5,358 | |||||||||
| Other liabilities | 30,113 | 28,855 | |||||||||
| Total deferred tax liabilities | 448,669 | 385,915 | |||||||||
| Net deferred tax assets | $ | 134,925 | 272,377 | ||||||||
The detail of the Company's net deferred tax assets (liabilities) was as follows:
| At November 30, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Net deferred tax assets: | |||||||||||
| Homebuilding | $ | 48,372 | 146,299 | ||||||||
| Financial Services | 32,085 | 40,738 | |||||||||
| Multifamily | 71,387 | 72,049 | |||||||||
| Lennar Other | (16,919) | 13,291 | |||||||||
| Net deferred tax assets | $ | 134,925 | 272,377 | ||||||||
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. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed each reporting period by the Company based on the consideration of all available positive and negative evidence using a "more-likely-than-not" standard with respect to whether deferred tax assets will be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, actual earnings, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with loss carryforwards not expiring unused and tax planning alternatives.
| At November 30, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Valuation allowance (1) | $ | (2,546) | (2,593) | ||||||||
| Federal tax effected NOL carryforwards (2) | 19,782 | 23,079 | |||||||||
| State tax effected NOL carryforwards (3) | 18,463 | 20,815 | |||||||||
(1)As of November 30, 2025 and 2024, the deferred tax assets included valuation allowances primarily related to state net operating loss ("NOL") carryforwards that are not more likely than not to be utilized due to an inability to carry back these losses in most states and short carryforward periods that exist in certain states.
(2)As of November 30, 2025 and 2024, the Company had federal tax effected NOL carryforwards that may be carried forward to offset future taxable income and begin to expire in 2030.
(3)As of November 30, 2025 and 2024, the Company had state tax effected NOL carryforwards that may be carried forward from 10 to 20 years or indefinitely, depending on the tax jurisdiction, with certain losses expiring between 2025 and 2041.
The Company had no gross unrecognized tax benefits for the years ended November 30, 2025, 2024, and 2023, respectively.
The following summarizes the changes in interest and penalties accrued with respect to gross unrecognized tax benefits:
| At November 30, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Accrued interest and penalties, beginning of the year | $ | — | — | ||||||||
| Interest income from audits and refund claims | (43) | (434) | |||||||||
| Increase (reduction) of interest and penalties | 43 | 434 | |||||||||
| Accrued interest and penalties, end of the year | $ | — | — | ||||||||
The Company participates in an IRS examination program, the Compliance Assurance Process ("CAP"). This program operates as a contemporaneous exam throughout the year in order to keep exam cycles current and achieve a higher level of compliance. Certain state taxing authorities are examining various fiscal years. The final outcome of these examinations is not yet determinable. The statute of limitations for the Company's major tax jurisdictions remains open for examination for 2020 and subsequent years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 28, 2026 | Showing above |
| 2024 | Jan 23, 2025 | |
| 2023 | Jan 26, 2024 | |
| 2022 | Jan 26, 2023 | |
| 2021 | Jan 28, 2022 | |
| 2020 | Jan 22, 2021 | |
| 2019 | Jan 27, 2020 | |
| 2018 | Jan 28, 2019 | |
| 2017 | Jan 25, 2018 | |
| 2016 | Jan 20, 2017 | |
| 2015 | Jan 22, 2016 | |
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.