NEXTNAV INC. Income Taxes Disclosure

14. Income Taxes

On October 28, 2021, the Company became the owner of NextNav Holdings, LLC, a Delaware limited liability company (“Holdings”)and the various operating subsidiaries of Holdings upon consummation of the Company’s 2021 business combination with Spartacus. Holdings is taxed as a partnership, and as such is generally not subject to federal, state, or local income tax directly. Rather, its members are subject to income taxations based on the member’s portion of Holdings’ income or loss. Accordingly, in addition to the Company’s operating activities, the Company will also incur income taxes on its allocable share of any net taxable income of Holdings.

Holdings’ non-operating subsidiary, CommLabs, Inc., is taxed as a U.S. corporation. Holdings, through its subsidiaries, also owns an Indian subsidiary, Commlabs Technology Centre Pvt. Ltd. (“Commlabs India”), which is taxed as a corporation in India and, as such, is subject to Indian entity-level income tax. Additionally in October of 2022, the Company acquired NextNav France, which is taxed as a corporation in France and as such is subject to French entity-level income tax.

U.S. and international components of (loss) income before income taxes were comprised of the following for the periods indicated:  

The provision for income taxes consisted of the following for the periods indicated:

The benefit from or provision for income taxes differs from the amount computed by applying the federal statutory income tax rate to the Company’s loss or income before income taxes as follows for the periods indicated:

The change in the Company’s effective tax rate in 2024 and 2025, as compared to the statutory rate was primarily due to the need for a full valuation allowance in the U.S and France. 

The Tax Cuts and Jobs Act enacted in December of 2017 requires certain Global Intangible Low Income (“GILTI”) earned by a controlled foreign corporation (“CFC”) to be included in the gross income of the CFC’s U.S. shareholder. The Company has elected the “period cost method” and treats taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred.

As of December 31, 2025, the Company has accumulated undistributed earnings generated by Commlabs India of approximately $1.9 million. The Company has an accumulated deficit with respect to NextNav France. Because all of these earnings generated by Commlabs have previously been subject to the one-time transition tax on foreign earnings required by the Tax Cuts and Jobs Act of 2017, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of the Company’s foreign investments would generally be limited to withholding taxes and state taxes. The Company intends, however, to indefinitely reinvest these earnings and expects future U.S. cash generation to be sufficient to meet future U.S. cash needs.

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows for the periods indicated:

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets (“DTA”). A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future growth.

On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $178.6 million has been recorded because management has concluded that it is more likely than not that such DTA will ultimately not be realized. The amount of the DTA considered realizable, however, could be adjusted in future years if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as the Company’s projections for growth.

As of December 31, 2025 and 2024 the Company did not have any unrecognized income tax benefits. 

The Company has U.S. income tax net operating loss (“NOL”) carryforwards of $275.5 million and $186.3 million as of December 31, 2025, and 2024, respectively. $5.0 million of the NOLs are expected to expire beginning in 2027 while the remaining $270.5 million can be carried forward indefinitely. The Company also has various state NOL carryforwards of $414.0million and $267.4 million as of December 31, 2025 and December 31, 2024 respectively which are expected to expire beginning in 2041. The Company’s NOLs in the U.S. may be limited under Section 382 of the Internal Revenue Code (“IRC”). NOLs are limited when there is a significant ownership change as defined by the IRC Section 382. At this time, the Company expects that none of its federal NOLs will expire unutilized as a result of a limitation under Section 382.

The Company had foreign NOLs as of December 31, 2025 of $6.2 million attributable to NextNav France which can be carried forward indefinitely.

The Company is subject to taxation in the United States, various states within the United States, India, and France. Each jurisdiction has its own statute of limitations for making assessment of additional tax liabilities. As of December 31, 2025 due to its net operating losses, all the Company’s tax years remained open for U.S. Federal and state income tax purposes. India generally has a 3-year statute of limitations, and years prior to 2023 are closed. France has a statute of limitation tax expires 3 years following the year that triggered the liability.