Lionsgate Studios Corp.LION
Lionsgate Studios Corp. Income Taxes Disclosure
Income Taxes
The components of pretax income (loss) from continuing operations, net of intercompany eliminations, are as follows:
| Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Amounts in millions) | |||||||||||||||||
| Canada | $ | (10.6) | $ | (2.4) | $ | 12.3 | |||||||||||
| Foreign | (148.7) | (274.9) | (251.8) | ||||||||||||||
| $ | (159.3) | $ | (277.3) | $ | (239.5) | ||||||||||||
The Company’s current and deferred income tax provisions are as follows:
| Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Amounts in millions) | |||||||||||||||||
| Current provision: | |||||||||||||||||
| Canada | $ | 0.4 | $ | 4.2 | $ | 0.5 | |||||||||||
| Canada Provincial | 0.2 | — | — | ||||||||||||||
| Foreign | 12.7 | 13.4 | 20.6 | ||||||||||||||
| Total current provision | $ | 13.3 | $ | 17.6 | $ | 21.1 | |||||||||||
| Deferred provision: | |||||||||||||||||
| Foreign | 2.9 | (0.4) | 0.6 | ||||||||||||||
| Total deferred provision | 2.9 | (0.4) | 0.6 | ||||||||||||||
| Total provision for income taxes | $ | 16.2 | $ | 17.2 | $ | 21.7 | |||||||||||
The Company’s income tax provision differs from the 15% Canadian federal statutory income tax rate applied to income (loss) before taxes primarily due to the mix of earnings generated across the various jurisdictions in which operations are conducted.
The differences between income taxes expected at Canadian federal statutory income tax rates and the tax provision are as set forth below:
| Year Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||||||||
| (Amounts in millions, except percentages) | ||||||||||||||||||||||||||
| Canadian federal statutory tax rate | $ | (23.9) | 15.0 | % | $ | (41.6) | 15.0 | % | $ | (35.9) | 15.0 | % | ||||||||||||||
Provincial income taxes(1) | 0.2 | (0.1) | % | — | — | % | — | — | % | |||||||||||||||||
| Foreign tax effects: | ||||||||||||||||||||||||||
| Australia | ||||||||||||||||||||||||||
| Effect of cross-border tax laws: | ||||||||||||||||||||||||||
| Withholding taxes | 1.2 | (0.8) | % | 1.2 | (0.4) | % | 1.2 | (0.5) | % | |||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||||
| Other | 0.2 | (0.1) | % | — | — | % | 0.1 | — | % | |||||||||||||||||
| Brazil | ||||||||||||||||||||||||||
| Effect of cross-border tax laws: | ||||||||||||||||||||||||||
| Withholding taxes | 1.6 | (1.0) | % | 0.2 | (0.1) | % | 0.9 | (0.4) | % | |||||||||||||||||
| India | ||||||||||||||||||||||||||
| Statutory tax rate difference between India and Canada | (0.8) | 0.5 | % | (3.1) | 1.1 | % | (1.1) | 0.5 | % | |||||||||||||||||
| Changes in valuation allowance | 1.5 | (0.9) | % | 6.3 | (2.3) | % | 2.3 | (1.0) | % | |||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||||
| Other | 0.8 | (0.5) | % | 0.5 | (0.2) | % | 0.9 | (0.4) | % | |||||||||||||||||
| Luxembourg | ||||||||||||||||||||||||||
| Statutory tax rate difference between Luxembourg and Canada | — | — | % | (0.8) | 0.3 | % | 0.1 | — | % | |||||||||||||||||
| Changes in valuation allowance | (0.5) | 0.3 | % | 518.5 | (187.0) | % | 3.0 | (1.3) | % | |||||||||||||||||
| Nontaxable and nondeductible items: | ||||||||||||||||||||||||||
| Nondeductible dividend expense | — | — | % | 5.8 | (2.1) | % | 23.5 | (9.8) | % | |||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||||
| Statutory loss on investment in subsidiaries | — | — | % | (519.6) | 187.4 | % | (27.3) | 11.4 | % | |||||||||||||||||
| Other | 0.4 | (0.3) | % | 0.2 | (0.1) | % | 0.3 | (0.1) | % | |||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||
| Statutory tax rate difference between the United Kingdom and Canada | 9.4 | (5.9) | % | 5.7 | (2.1) | % | 7.9 | (3.3) | % | |||||||||||||||||
| Changes in valuation allowance | 5.2 | (3.3) | % | (2.6) | 0.9 | % | 0.4 | (0.2) | % | |||||||||||||||||
| Nontaxable and nondeductible items: | ||||||||||||||||||||||||||
| Nontaxable intercompany profit eliminations | (2.4) | 1.5 | % | — | — | % | — | — | % | |||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||||
| Return to provision adjustments | (2.8) | 1.8 | % | 0.8 | (0.3) | % | (1.0) | 0.4 | % | |||||||||||||||||
| Statutory adjustment to basis of film assets | (15.0) | 9.4 | % | (6.3) | 2.3 | % | (8.1) | 3.4 | % | |||||||||||||||||
| Other | (0.4) | 0.3 | % | (0.3) | 0.1 | % | (0.3) | 0.1 | % | |||||||||||||||||
| United States | ||||||||||||||||||||||||||
| Statutory tax rate difference between the United States and Canada | (15.9) | 10.0 | % | (15.4) | 5.6 | % | (19.5) | 8.1 | % | |||||||||||||||||
State and local income taxes(2), net of U.S. federal effect | 2.2 | (1.4) | % | 0.4 | (0.1) | % | 1.4 | (0.6) | % | |||||||||||||||||
| Changes in valuation allowance | 36.1 | (22.7) | % | 43.5 | (15.7) | % | 39.7 | (16.6) | % | |||||||||||||||||
| Nontaxable and nondeductible items: | ||||||||||||||||||||||||||
| Nontaxable intercompany profit eliminations | (1.9) | 1.2 | % | 4.5 | (1.6) | % | — | — | % | |||||||||||||||||
| Nontaxable dividend income | (2.3) | 1.4 | % | — | — | % | — | — | % | |||||||||||||||||
| Nontaxable U.S. branch income (loss) | 9.8 | (6.1) | % | 2.1 | (0.8) | % | 1.9 | (0.8) | % | |||||||||||||||||
| Nondeductible officer compensation expense | 11.8 | (7.4) | % | 4.2 | (1.5) | % | 7.7 | (3.2) | % | |||||||||||||||||
| Nondeductible meals & entertainment expense | 1.7 | (1.1) | % | 2.4 | (0.9) | % | 0.9 | (0.4) | % | |||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||||
| Noncontrolling interest in partnerships | (1.3) | 0.8 | % | 2.8 | (1.0) | % | 18.6 | (7.8) | % | |||||||||||||||||
| Other | (1.0) | 0.6 | % | 0.9 | (0.3) | % | 1.1 | (0.5) | % | |||||||||||||||||
| Other foreign jurisdictions | 5.1 | (3.2) | % | 3.4 | (1.2) | % | 4.6 | (1.9) | % | |||||||||||||||||
| Effect of cross-border tax laws: | ||||||||||||||||||||||||||
| Foreign income inclusion | 1.6 | (1.0) | % | 0.3 | (0.1) | % | 0.1 | — | % | |||||||||||||||||
| Withholding taxes | 0.2 | (0.1) | % | 3.1 | (1.1) | % | 0.3 | (0.1) | % | |||||||||||||||||
| Changes in valuation allowance | (0.3) | 0.2 | % | 1.1 | (0.4) | % | (1.8) | 0.8 | % | |||||||||||||||||
| Nontaxable and nondeductible items: | ||||||||||||||||||||||||||
| Other | 0.5 | (0.3) | % | (1.0) | 0.4 | % | (0.2) | 0.1 | % | |||||||||||||||||
| Changes in unrecognized tax benefits | (4.8) | 3.0 | % | — | — | % | — | — | % | |||||||||||||||||
| Total provision for income taxes | $ | 16.2 | (10.2) | % | $ | 17.2 | (6.2) | % | $ | 21.7 | (9.1) | % | ||||||||||||||
_______________________
(1)Provincial taxes in British Columbia made up a majority (greater than 50%) of the tax effect in this category.
(2)State taxes in California and Texas made up a majority (greater than 50%) of the tax effect in this category.
The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:
| March 31, 2026 | March 31, 2025 | ||||||||||
| (Amounts in millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Net operating losses | $ | 1,215.3 | $ | 1,194.1 | |||||||
| Foreign tax credits | 33.8 | 36.6 | |||||||||
| Investment in film and television programs | 15.9 | — | |||||||||
| Accrued compensation | 39.6 | 34.8 | |||||||||
| Operating leases - liabilities | 69.0 | 76.3 | |||||||||
| Other assets | 28.2 | 45.8 | |||||||||
| Reserves | 14.8 | 19.1 | |||||||||
| Interest | 145.9 | 172.4 | |||||||||
| Total deferred tax assets | 1,562.5 | 1,579.1 | |||||||||
| Valuation allowance | (1,478.5) | (1,477.5) | |||||||||
| Deferred tax assets, net of valuation allowance | $ | 84.0 | $ | 101.6 | |||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | (3.0) | (2.0) | |||||||||
| Investment in film and television programs | — | (13.2) | |||||||||
| Operating leases - assets | (61.4) | (68.6) | |||||||||
| Unrealized gains on derivative contracts | (18.7) | (25.4) | |||||||||
| Other | (15.0) | (5.3) | |||||||||
| Total deferred tax liabilities | $ | (98.1) | $ | (114.5) | |||||||
| Net deferred tax liabilities | $ | (14.1) | $ | (12.9) | |||||||
The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related to Canadian, U.S. and other foreign net operating loss carryforwards (“NOLs”), U.S. federal foreign tax credit carryforwards, and carryforwards of U.S. federal and state interest expenses limited in their deduction under the Internal Revenue Code and similar state and local statutes. In its assessment, the Company has concluded there to be sufficient uncertainty regarding the future realization of these deferred tax assets.
The table below presents the changes in the deferred tax valuation allowances:
| Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Amounts in millions) | |||||||||||||||||
| Beginning balance | $ | 1,477.5 | $ | 852.2 | $ | 644.8 | |||||||||||
| Changes in valuation allowance | 8.1 | 583.3 | 22.2 | ||||||||||||||
Other (1) | (7.1) | 42.0 | 185.2 | ||||||||||||||
| Ending balance | $ | 1,478.5 | $ | 1,477.5 | $ | 852.2 | |||||||||||
_______________________
(1)Valuation allowance adjustments recorded in other comprehensive income are primarily associated with hedging activity. Amounts for the years ended March 31, 2025 and March 31, 2024 also include opening balances of $23.0 million and $187.0 million, respectively, due to the acquisition of eOne on December 27, 2023.
As of March 31, 2026, the Company had Canadian NOLs of $380.6 million which will expire beginning in 2030, U.S. federal NOLs of approximately $1,203.0 million available to reduce future U.S. federal income taxes, certain of which will expire in 2037 through 2038, state NOLs of approximately $831.5 million available to reduce future state income taxes which expire in varying amounts beginning in 2027, Luxembourg NOLs of $3,352.8 million which will expire beginning in 2036, U.K. NOLs of $28.5 million with no expiration and other foreign jurisdiction NOLs of $19.6 million which will expire beginning in 2028. In addition, as of March 31, 2026, the Company had U.S. federal credit carryforwards related to foreign taxes paid of approximately $33.8 million to offset future U.S. federal income taxes that will expire beginning in 2027.
The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “other noncurrent liabilities” in the consolidated balance sheets. The aggregate changes in the Company’s gross amount of unrecognized tax benefits, exclusive of interest and penalties, are summarized as follows (amounts in millions):
| Gross unrecognized tax benefits at March 31, 2023 (liability as of March 31, 2023) | $ | 0.3 | |||
| Increases related to current year tax position | — | ||||
| Increases related to prior year tax positions | 5.3 | ||||
| Decreases related to prior year tax positions | — | ||||
| Settlements | — | ||||
| Lapse in statute of limitations | (0.3) | ||||
| Gross unrecognized tax benefits at March 31, 2024 (liability as of March 31, 2024) | 5.3 | ||||
| Increases related to current year tax position | — | ||||
| Increases related to prior year tax positions | 5.6 | ||||
| Decreases related to prior year tax positions | (2.0) | ||||
| Settlements | — | ||||
| Lapse in statute of limitations | (0.8) | ||||
| Gross unrecognized tax benefits at March 31, 2025 (liability as of March 31, 2025) | 8.1 | ||||
| Increases related to current year tax position | — | ||||
| Increases related to prior year tax positions | 2.4 | ||||
| Decreases related to prior year tax positions | — | ||||
| Settlements | — | ||||
| Lapse in statute of limitations | (0.5) | ||||
| Gross unrecognized tax benefits at March 31, 2026 (liability as of March 31, 2026) | $ | 10.0 | |||
The Company records interest and penalties on unrecognized tax benefits as part of its income tax provision. For the years ended March 31, 2026, 2025, and 2024, the Company recognized insignificant amounts of interest and penalties related to uncertain tax positions. The liability for accrued interest and penalties amounted to $1.8 million and $2.0 million as of March 31, 2026 and 2025, respectively.
The Company is subject to taxation in Canada and the U.S., in addition to several other foreign jurisdictions. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward and make adjustments up to the amount of the NOLs. While the Company is in various stages of inquiry and examination with certain taxing authorities and believes that its tax positions will more-likely-than-not be sustained, it is nonetheless possible that future obligations related to these matters could arise. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from an examination.
The amounts of cash income taxes paid, net of refunds were as follows:
| Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Amounts in millions) | |||||||||||||||||
| Federal (Canada) | $ | 0.2 | $ | 0.1 | $ | 0.3 | |||||||||||
| Australia | 1.2 | 1.2 | 1.2 | ||||||||||||||
| Brazil | 1.6 | 0.2 | 1.0 | ||||||||||||||
| India | 0.8 | 0.5 | 0.9 | ||||||||||||||
| Mexico | 0.9 | 0.4 | 0.9 | ||||||||||||||
| United Kingdom | 3.2 | 11.0 | 12.7 | ||||||||||||||
| Other Foreign Jurisdictions | 6.2 | 6.7 | 5.1 | ||||||||||||||
| Income taxes, net of refunds | $ | 14.1 | $ | 20.1 | $ | 22.1 | |||||||||||
On July 4, 2025, H.R. 1, commonly referred to as the One Big Beautiful Bill Act, was enacted in the U.S. H.R. 1 includes significant provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the U.S. international tax framework, and the restoration of favorable tax treatment for certain business provisions. This legislation has multiple effective dates, with certain provisions becoming effective beginning in 2025 and others implemented through 2027. The legislation did not have a material impact on the Company’s fiscal 2026 effective tax rate or consolidated financial statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 27, 2026 | Showing above |
| 2025 | May 30, 2025 | |
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.