OPENLANE, Inc.OPLN
OPENLANE, Inc. Income Taxes Disclosure
Income Taxes
The components of our income (loss) from continuing operations before income taxes and the provision for income taxes are as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income (loss) from continuing operations before income taxes: | |||||||||||||||||
| Domestic | $ | 101.0 | $ | 90.4 | $ | (209.7) | |||||||||||
| Foreign | 91.2 | 67.5 | 63.2 | ||||||||||||||
| Total | $ | 192.2 | $ | 157.9 | $ | (146.5) | |||||||||||
| Income tax expense (benefit): | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 14.3 | $ | 19.6 | $ | 22.1 | |||||||||||
| Foreign | 24.8 | 19.1 | 16.0 | ||||||||||||||
| State | 7.3 | 7.6 | — | ||||||||||||||
| Total current provision | 46.4 | 46.3 | 38.1 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (29.5) | 3.4 | (29.4) | ||||||||||||||
| Foreign | 1.4 | (1.9) | 3.2 | ||||||||||||||
| State | (3.8) | 0.2 | (3.6) | ||||||||||||||
| Total deferred provision | (31.9) | 1.7 | (29.8) | ||||||||||||||
| Income tax expense | $ | 14.5 | $ | 48.0 | $ | 8.3 | |||||||||||
The following table reconciles the U.S. federal statutory rate to our effective income tax rate as follows (dollars in millions):
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Statutory rate | $ | 40.4 | 21.0 | % | $ | 33.1 | 21.0 | % | $ | (30.8) | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net (1)(2)(3) | (0.1) | — | % | 4.3 | 2.7 | % | (10.0) | 6.8 | % | ||||||||||||||||||||||||||
| Foreign tax effects | |||||||||||||||||||||||||||||||||||
| Canada | |||||||||||||||||||||||||||||||||||
| Provincial taxes | 8.5 | 4.4 | % | 4.9 | 3.1 | % | 6.0 | (4.1) | % | ||||||||||||||||||||||||||
| Rate differential | (4.1) | (2.1) | % | (2.8) | (1.8) | % | (3.3) | 2.2 | % | ||||||||||||||||||||||||||
Withholding taxes | 0.6 | 0.3 | % | 0.5 | 0.3 | % | 7.7 | (5.3) | % | ||||||||||||||||||||||||||
| Other, net | 0.9 | 0.4 | % | (1.0) | (0.6) | % | — | — | % | ||||||||||||||||||||||||||
Belgium | |||||||||||||||||||||||||||||||||||
Goodwill impairment | — | — | % | — | — | % | 1.6 | (1.1) | % | ||||||||||||||||||||||||||
| Other, net | 0.8 | 0.4 | % | 0.8 | 0.5 | % | 0.6 | (0.4) | % | ||||||||||||||||||||||||||
| Other foreign jurisdictions | 1.1 | 0.6 | % | 1.2 | 0.7 | % | 1.0 | (0.7) | % | ||||||||||||||||||||||||||
Effect of changes in tax laws or rates | 0.6 | 0.3 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Effect of cross-border tax laws | |||||||||||||||||||||||||||||||||||
| Foreign-derived intangible income | (3.3) | (1.7) | % | (2.7) | (1.7) | % | (2.2) | 1.5 | % | ||||||||||||||||||||||||||
Foreign tax credit | (0.6) | (0.3) | % | (0.6) | (0.4) | % | (4.1) | 2.8 | % | ||||||||||||||||||||||||||
Foreign exchange loss | — | — | % | (0.2) | (0.1) | % | (1.6) | 1.1 | % | ||||||||||||||||||||||||||
| Other, net | — | — | % | — | — | % | 2.4 | (1.6) | % | ||||||||||||||||||||||||||
| Tax credits | (1.6) | (0.9) | % | (0.8) | (0.5) | % | 0.3 | (0.2) | % | ||||||||||||||||||||||||||
| Changes in valuation allowances | (31.3) | (16.3) | % | 1.0 | 0.6 | % | 30.3 | (20.7) | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| Excess officer's compensation | 1.7 | 0.9 | % | 2.4 | 1.5 | % | 1.5 | (1.0) | % | ||||||||||||||||||||||||||
| Acquisition and divestiture related adjustment | — | — | % | 5.5 | 3.5 | % | — | — | % | ||||||||||||||||||||||||||
| Other, net | (0.5) | (0.3) | % | (0.6) | (0.4) | % | 0.5 | (0.4) | % | ||||||||||||||||||||||||||
| Reserves for tax exposures | 1.6 | 0.9 | % | 2.4 | 1.5 | % | 8.1 | (5.5) | % | ||||||||||||||||||||||||||
| Other, net | (0.2) | (0.1) | % | 0.6 | 0.5 | % | 0.3 | (0.1) | % | ||||||||||||||||||||||||||
Effective rate | $ | 14.5 | 7.5 | % | $ | 48.0 | 30.4 | % | $ | 8.3 | (5.7) | % | |||||||||||||||||||||||
(1) State taxes in make up the majority (greater than 50 percent) of the tax effect of the state and local income tax category in 2025.
(2) State taxes in make up the majority (greater than 50 percent) of the tax effect of the state and local income tax category in 2024.
(3) State taxes in make up the majority (greater than 50 percent) of the tax effect of the state and local income tax category in 2023.
The effective tax rate in 2025 was favorably impacted by the release of the valuation allowance against the U.S. net deferred tax asset. The effective tax rate in 2023 was unfavorably impacted by the goodwill and other intangibles impairment charges and the recording of valuation allowance against the U.S. net deferred tax asset.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax benefits associated with the goodwill and tradename impairments resulted in the U.S. being in a net deferred tax asset position. Due to a three-year cumulative loss related to U.S. operations, we recorded a valuation allowance against the U.S. net deferred tax asset at December 31, 2024. In the fourth quarter of 2025, the valuation allowance against the U.S. net deferred tax asset was released due to sufficient positive evidence related to U.S. operations and U.S. taxable income in the three-year period and anticipated future periods.
We offset all deferred tax assets and liabilities by jurisdiction, as well as any related valuation allowance, and present them as a non-current deferred income tax asset or liability (as applicable). Deferred tax assets (liabilities) are comprised of the following (in millions):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Gross deferred tax assets: | |||||||||||
| Allowances for trade and finance receivables | $ | 8.6 | $ | 6.2 | |||||||
Goodwill and intangible assets | 5.1 | 9.1 | |||||||||
| Accruals and liabilities | 3.1 | 2.4 | |||||||||
| Employee benefits and compensation | 6.3 | 6.4 | |||||||||
| Net operating loss carryforwards | 20.5 | 21.3 | |||||||||
| Right of use lease liability | 15.3 | 17.6 | |||||||||
| Other | 3.3 | 4.0 | |||||||||
| Total deferred tax assets | 62.2 | 67.0 | |||||||||
| Deferred tax asset valuation allowance | (30.2) | (63.3) | |||||||||
| Total | 32.0 | 3.7 | |||||||||
| Gross deferred tax liabilities: | |||||||||||
| Property and equipment | (1.9) | (2.4) | |||||||||
| Right of use lease asset | (14.0) | (16.3) | |||||||||
| Other | (4.0) | (4.9) | |||||||||
| Total | (19.9) | (23.6) | |||||||||
Net deferred tax assets (liabilities) | $ | 12.1 | $ | (19.9) | |||||||
The tax benefit from state and federal net operating loss carryforwards expires as follows (in millions):
| 2026 | $ | 0.2 | |||
| 2027 | — | ||||
| 2028 | — | ||||
| 2029 | — | ||||
| 2030 | — | ||||
| 2031 and after | 20.3 | ||||
| $ | 20.5 | ||||
Permanently reinvested undistributed earnings of our foreign subsidiaries were approximately $565.9 million at December 31, 2025. Because these amounts have been or will be permanently reinvested in properties and working capital, we have not recorded the deferred taxes associated with these earnings. If the undistributed earnings of foreign subsidiaries were to be remitted, state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits. It is not practical for us to determine the additional tax that would be incurred upon remittance of these earnings.
Income taxes paid related to continuing operations (net of refunds) consisted of the following (in millions):
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
U.S. federal | $ | 16.8 | $ | 17.1 | $ | 7.5 | |||||||||||
U.S. state and local | |||||||||||||||||
New Jersey | (5.5) | — | — | ||||||||||||||
Other | 4.4 | 5.2 | 2.2 | ||||||||||||||
Total U.S. state and local | (1.1) | 5.2 | 2.2 | ||||||||||||||
| Foreign | |||||||||||||||||
| Belgium | 6.4 | 3.7 | 3.3 | ||||||||||||||
| Canada - Federal | 10.0 | 6.8 | 14.8 | ||||||||||||||
Canada - Ontario | 4.1 | 1.1 | 2.1 | ||||||||||||||
Canada - Quebec | 1.7 | 0.2 | 2.6 | ||||||||||||||
| Other | 2.5 | 2.5 | 3.3 | ||||||||||||||
| Total foreign | 24.7 | 14.3 | 26.1 | ||||||||||||||
| Total | $ | 40.4 | $ | 36.6 | $ | 35.8 | |||||||||||
We apply the provisions of ASC 740, Income Taxes. ASC 740 clarifies the accounting and reporting for uncertainty in income taxes recognized in an enterprise's financial statements. These provisions prescribe a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken on income tax returns.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance at beginning of period | $ | 16.0 | $ | 14.9 | |||||||
| Increase in prior year tax positions | 1.1 | 0.7 | |||||||||
| Increase in current year tax positions | 0.3 | 0.5 | |||||||||
Settlements | (3.8) | — | |||||||||
| Lapse in statute of limitations | (0.4) | (0.1) | |||||||||
| Balance at end of period | $ | 13.2 | $ | 16.0 | |||||||
The total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate was $12.8 million and $14.6 million at December 31, 2025 and 2024, respectively.
We record interest and penalties associated with the uncertain tax positions within our provision for income taxes on the consolidated statement of income (loss). We had reserves totaling $3.0 million and $2.5 million at December 31, 2025 and 2024, respectively, associated with interest and penalties, net of tax.
The provision for income taxes involves management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by us. In addition, U.S. and non-U.S. tax authorities periodically review income tax returns filed by us and can raise issues regarding our filing positions, timing and amount of income or deductions and the allocation of income among the jurisdictions in which we operate. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. In the normal course of business we are subject to examination by taxing authorities in the U.S., Canada, Western Europe, United Kingdom, Mexico, Uruguay and the Philippines. In general, the examination of our material tax returns is completed for the years prior to 2022.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 18, 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.