Lineage, Inc.LINE
Lineage, Inc. Income Taxes Disclosure
Income taxes
Components of earnings before income taxes
The following table summarizes the components of earnings before income taxes for the years ended December 31:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | 69 | $ | (648) | $ | 13 | |||||||||||
| Foreign | (184) | (192) | (123) | ||||||||||||||
| Net income (loss) before income taxes | $ | (115) | $ | (840) | $ | (110) | |||||||||||
Summary of current and deferred income taxes
Income tax expense (benefit) is summarized as follows for the years ended December 31:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax expense (benefit): | |||||||||||||||||
| U.S. – Federal | $ | 3 | $ | 1 | $ | 18 | |||||||||||
| U.S. – State | 2 | — | 8 | ||||||||||||||
| Foreign | 9 | 15 | 18 | ||||||||||||||
| Subtotal | 14 | 16 | 44 | ||||||||||||||
| Deferred tax expense (benefit): | |||||||||||||||||
| U.S. – Federal | 5 | (48) | (15) | ||||||||||||||
| U.S. – State | 1 | (8) | (8) | ||||||||||||||
| Foreign | (22) | (49) | (35) | ||||||||||||||
| Subtotal | (16) | (105) | (58) | ||||||||||||||
| Total tax expense (benefit): | |||||||||||||||||
| U.S. – Federal | 8 | (47) | 3 | ||||||||||||||
| U.S. – State | 3 | (8) | — | ||||||||||||||
| Foreign | (13) | (34) | (17) | ||||||||||||||
| Total Income tax expense (benefit) | $ | (2) | $ | (89) | $ | (14) | |||||||||||
Income tax expense (benefit) attributable to net income (loss) before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate of 21% to Net income (loss) before income taxes.
The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a prospective basis. The reconciliation for the year ended December 31, 2025 is as follows:
| (in millions) | $ | % | |||||||||
| U.S. federal statutory income tax rate | $ | (24) | 21 | % | |||||||
| Domestic federal | |||||||||||
| Tax credits | (4) | 3 | |||||||||
| Nontaxable and nondeductible items: | |||||||||||
| Nontaxable US REIT income | (11) | 10 | |||||||||
| Nondeductible stock compensation | 6 | (5) | |||||||||
| Other | 2 | (2) | |||||||||
| Changes in valuation allowance | 1 | (1) | |||||||||
| Other | 3 | (3) | |||||||||
Domestic state and local income taxes, net of federal effect (1) | 1 | (1) | |||||||||
| Foreign tax effects | |||||||||||
| Australia | 5 | (4) | |||||||||
| Denmark | 5 | (4) | |||||||||
| Netherlands: | |||||||||||
| Foreign income taxed at rates other than 21% | (5) | 4 | |||||||||
| Nondeductible goodwill impairment | 6 | (5) | |||||||||
| Nondeductible accrued interest expense | 4 | (3) | |||||||||
| Other | (3) | 3 | |||||||||
| Spain: | |||||||||||
| Nondeductible loss on divestiture | 15 | (13) | |||||||||
| Other | (4) | 3 | |||||||||
| Other foreign jurisdictions | 1 | (1) | |||||||||
| Total | $ | (2) | 2 | % | |||||||
(1) The state and local income taxes associated with Texas, California, and Oregon made up the majority of the tax effect in this line. | |||||||||||
For the years ended December 31, 2024 and 2023, the reconciliations are as follows:
| (in millions) | 2024 | 2023 | |||||||||
| Net income (loss) before income taxes | $ | (840) | $ | (110) | |||||||
| Income tax expense (benefit): | |||||||||||
| U.S. statutory federal income tax rate | (176) | (23) | |||||||||
| Foreign income taxed at rates other than 21% | (11) | (8) | |||||||||
| Uncertain tax provisions | 4 | (8) | |||||||||
| Valuation allowance movement | (12) | — | |||||||||
| Nondeductible expenses | 9 | 6 | |||||||||
| Withholding tax | 1 | 1 | |||||||||
| State and local tax | (6) | (1) | |||||||||
| Tax adjustments related to REIT | 112 | 10 | |||||||||
| Tax credits | (4) | — | |||||||||
| Other | (6) | 9 | |||||||||
| Income tax expense (benefit) | $ | (89) | $ | (14) | |||||||
Deferred income taxes
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Goodwill | $ | 46 | $ | 72 | |||||||
| Lease liabilities | 207 | 191 | |||||||||
| Accruals | 13 | 18 | |||||||||
| Net operating losses, credits, and other tax attribute carryforwards | 172 | 159 | |||||||||
| Other | 50 | 50 | |||||||||
| Total deferred tax assets | 488 | 490 | |||||||||
| Less: Valuation allowance | (49) | (42) | |||||||||
| Total net deferred tax assets | 439 | 448 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant, and equipment | (314) | (311) | |||||||||
| Other intangible assets | (156) | (164) | |||||||||
| Lease assets | (173) | (168) | |||||||||
| Investments in flow-through entities | (46) | (48) | |||||||||
| Other | (7) | (12) | |||||||||
| Total deferred tax liabilities | (696) | (703) | |||||||||
| Net deferred tax assets/(liabilities) | $ | (257) | $ | (255) | |||||||
The net deferred tax liability above is presented in the consolidated balance sheets as follows:
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Net deferred tax assets included within other assets | $ | 46 | $ | 49 | |||||||
| Net deferred tax liabilities included within deferred income tax liability | (303) | (304) | |||||||||
| Total net deferred tax liabilities | $ | (257) | $ | (255) | |||||||
As of December 31, 2025, there were operating loss carryforwards of $629 million related to U.S., state, and foreign net operating losses, of which $363 million do not expire and the remaining expire, if not utilized, from 2026 to 2045. There were also total tax credits of $10 million which expire, if not utilized, from 2026 to 2045.
In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion of or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more-likely-than-not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances on December 31, 2025 and 2024. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. It is reasonably possible that Company’s valuation allowance positions may change within the next twelve months, and any related changes would be recorded in the period such a determination is made.
The valuation allowance for deferred tax assets as of December 31, 2025 and 2024 was $49 million and $42 million, respectively. The change in valuation allowance was primarily related to certain U.S., Germany, and Australia deferred tax assets that changed as a result of current year activity. During the year ended December 31, 2024, the Company released a valuation allowance established on deferred tax assets attributable to existing net operating losses carryforwards and tax credits in the U.S., resulting in an income tax benefit of $24 million, recorded in Deferred income tax liability on the consolidated balance sheets. The release of the valuation allowance was due to the Company’s internal restructurings.
Uncertain tax positions
The beginning and ending balances of the Company’s uncertain tax positions are reconciled below for the years ended December 31:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Total uncertain tax positions as of January 1 | $ | 11 | $ | 9 | $ | 18 | |||||||||||
| Increases related to positions taken in the current year | 1 | 4 | — | ||||||||||||||
| Increases related to positions taken in prior years | — | — | 1 | ||||||||||||||
| Current year releases | (1) | (2) | (10) | ||||||||||||||
| Total uncertain tax positions as of December 31 | $ | 11 | $ | 11 | $ | 9 | |||||||||||
The Company’s policy regarding interest and penalties related to uncertain tax positions is to record interest and penalties as an element of income tax expense. As of December 31, 2025 and 2024, the Company had liabilities of $4 million and $3 million, respectively, of potential interest and penalties associated with uncertain tax positions. During the years ended December 31, 2025, 2024, and 2023, the Company recognized interest and penalties associated with uncertain tax positions through Income tax expense (benefit) of $1 million, $1 million, and $2 million, respectively.
Uncertain tax positions of $8 million as of December 31, 2025, if subsequently recognized, will affect the Company’s effective tax rate favorably at the time when such a benefit is recognized.
Other income tax updates
The 2015 through 2025 tax years generally remain open to examination by U.S. federal, state, and foreign tax authorities.
The Company has analyzed its global cash requirements as of December 31, 2025 and has recorded a $1 million deferred tax liability related to foreign income and withholding tax that will be incurred with respect to the undistributed foreign earnings which are not permanently reinvested.
The Organization for Economic Co-operation and Development (“OECD”) has issued Pillar Two Model Rules introducing a new global minimum tax of 15% effective for tax years beginning on or after January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation. The Company has consolidated revenue of more than €750 million per annum and therefore is in scope of the Pillar Two rules which entail tax compliance obligations and can potentially lead to additional taxes where the effective tax rate in a jurisdiction is below 15%. The Company is continuing to evaluate the impact of proposed and enacted legislative changes as new guidance becomes available.
Income taxes paid
The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a prospective basis. The following is a supplemental schedule of cash paid for income taxes, net of refunds for the year ended December 31, 2025:
| (in millions) | 2025 | ||||
| U.S. federal | $ | 2 | |||
| U.S. state and local | |||||
| Texas | 2 | ||||
| Foreign | |||||
| Australia | 3 | ||||
| Canada | 5 | ||||
| Netherlands | 6 | ||||
| Poland | 4 | ||||
| Other | 4 | ||||
| Total cash paid during the period for income taxes, net of refunds | $ | 26 | |||
Tax reform
On July 4, 2025, the One Big Beautiful Bill Act of 2025 was signed into U.S. law, which includes a broad range of tax reforms, including those that affect the taxation of REITs and their investors. Most notably, for years beginning on or after January 1, 2026, the new law relaxed the REIT asset test requirement with respect to taxable REIT subsidiaries, providing that not more than 25% of the gross value of a REIT’s assets may be represented by securities of one or more taxable REIT subsidiaries, as compared to the previous 20% rule. It also permanently extended the section 199A pass-through qualified business income deduction, allowing certain individuals, trusts, and estates to deduct 20% of qualifying REIT dividends. No significant impact of this new law on the consolidated financial statements for the year ended December 31, 2025 has been noted. The Company will continue to evaluate the impact on the consolidated financial statements as certain provisions come into effect or more information becomes available.
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.