Spok Holdings, IncSPOK
Spok Holdings, Inc Income Taxes Disclosure
INCOME TAXES
The significant components of our provision for income taxes attributable to current operations for the periods stated were as follows:
| For the Year Ended December 31, | |||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Income before income taxes | $ | 21,442 | $ | 20,032 | $ | 22,325 | |||||||||||
| Current: | |||||||||||||||||
| Federal tax | $ | — | $ | — | $ | — | |||||||||||
| State tax | 402 | 460 | 299 | ||||||||||||||
| Foreign tax | (9) | 34 | (17) | ||||||||||||||
| Total current | 393 | 494 | 282 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal tax | 4,360 | 4,047 | 5,099 | ||||||||||||||
| State tax | 778 | 522 | 1,010 | ||||||||||||||
| Foreign tax | 30 | 4 | 268 | ||||||||||||||
| Total deferred | 5,168 | 4,573 | 6,377 | ||||||||||||||
| Provision for income taxes | $ | 5,561 | $ | 5,067 | $ | 6,659 | |||||||||||
Upon adoption of ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", as described in Note 2, "Recent Accounting standards", cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows:
| (Dollars in thousands) | For the Year Ended December 31, 2025 | ||||
| United States Federal | $ | — | |||
| State: | |||||
| Massachusetts | 60 | ||||
Illinois | 59 | ||||
| North Carolina | 52 | ||||
Texas | 46 | ||||
Pennsylvania | 37 | ||||
California | 34 | ||||
Other (a) | 117 | ||||
| Total state: | 405 | ||||
| Foreign | (3) | ||||
| Total cash paid for income taxes (net of refunds) | $ | 402 | |||
| (a) The amount of income taxes paid during the year does not meet the 5% disaggregation threshold and is included in “Other”. | |||||
Cash paid for income taxes, net of refunds, during the years ended December 31, 2024 and 2023 was $0.6 million and $0.2 million, respectively.
Foreign income before income tax (benefit) expense is immaterial to consolidated income before income tax expense. The following table summarizes the principal elements of the difference between the United States federal statutory rate of 21% and our effective tax rate for the years ended December 31, 2025, 2024 and 2023:
| (Dollars in thousands) | 2025 | 2024 (b) | 2023 (b) | ||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 21,442 | $ | 20,032 | $ | 22,325 | |||||||||||||||||||||||||||||
| Income taxes computed at the federal statutory rate | $ | 4,503 | 21.0 | % | $ | 4,207 | 21.0 | % | $ | 4,688 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal benefit (a) | 1,134 | 5.3 | % | 886 | 4.4 | % | 1,343 | 6.0 | % | ||||||||||||||||||||||||||
Foreign tax effects | |||||||||||||||||||||||||||||||||||
Other foreign jurisdictions | 2 | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Research and development and other tax credits | (180) | (0.8) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Nontaxable or Nondeductible items | |||||||||||||||||||||||||||||||||||
| Excess executive compensation | 862 | 4.0 | % | 609 | 3.0 | % | 405 | 1.8 | % | ||||||||||||||||||||||||||
Stock compensation | (672) | (3.1) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other | (47) | (0.2) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Other adjustments | (41) | (0.2) | % | (635) | (3.1) | % | 223 | 1.0 | % | ||||||||||||||||||||||||||
| Provision for income taxes | $ | 5,561 | 25.9 | % | $ | 5,067 | 25.3 | % | $ | 6,659 | 29.8 | % | |||||||||||||||||||||||
(a) During the year ended December 31, 2025, state taxes in California, Illinois, Virginia, Pennsylvania, New Jersey and Massachusetts made up the majority (greater than 50 percent) of the tax effect in this category. | |||||||||||||||||||||||||||||||||||
(b) The Company adopted ASU 2023‑09 prospectively in 2025. Prior periods have not been restated and therefore do not reflect the disaggregation requirements introduced by the standard. | |||||||||||||||||||||||||||||||||||
The anticipated effective income tax rate is expected to continue to differ from the federal statutory rate primarily due to the effect of state income taxes and permanent differences between book and taxable income. The earnings of non-United States subsidiaries are deemed to be indefinitely reinvested in non-United States operations.
The components of deferred income tax assets, net at December 31, 2025 and 2024 were as follows:
| December 31, | |||||||||||
| (Dollars in thousands) | 2025 | 2024 | |||||||||
| Capitalized research and development costs | $ | 9,810 | $ | 11,494 | |||||||
| Net operating loss carryforward | 16,111 | 19,722 | |||||||||
| Property and equipment | 3,662 | 3,521 | |||||||||
| Accrued liabilities, reserves and other expenses | 1,882 | 2,361 | |||||||||
| Research and development credits | 6,163 | 6,430 | |||||||||
| Tax credits | 681 | 681 | |||||||||
| Stock-based compensation | 1,909 | 1,862 | |||||||||
| Operating lease liabilities | 1,765 | 2,243 | |||||||||
| Other | 467 | 339 | |||||||||
| Gross deferred income tax assets | 42,450 | 48,653 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Intangible assets | (2,325) | (2,319) | |||||||||
| Right-of-use assets | (1,647) | (2,109) | |||||||||
| Prepaid and other expenses | (29) | (211) | |||||||||
| Gross deferred income tax liabilities | (4,001) | (4,639) | |||||||||
| Net deferred income tax assets | 38,449 | 44,014 | |||||||||
| Valuation allowance | (1,919) | (2,328) | |||||||||
Total deferred income tax assets, net | $ | 36,530 | $ | 41,686 | |||||||
Net Operating Losses and Tax Credits
As of December 31, 2025, we had approximately $69.8 million of federal net operating losses available to offset future taxable income, of which approximately $24.8 million expire between 2027 and 2030 and $45.0 million were indefinite-lived.
As of December 31, 2025, we had approximately $25.7 million of state net operating losses available to offset future taxable income, of which approximately $18.0 million expire between 2027 and 2043 and $7.7 million were indefinite-lived.
As of December 31, 2025, we had approximately $6.2 million of research and development tax credit carryforwards that expire in varying amounts with expiration dates between 2030 through 2045.
Valuation Allowance
We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence, and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of the deferred income tax assets will be realized in future periods.
The Company had a valuation allowance of $1.9 million and $2.3 million as of December 31, 2025 and 2024, respectively, related to federal foreign tax credits and certain state net operating losses and state tax credits, as the Company does not believe current projections of future taxable income will be sufficient to utilize those tax assets and credits prior to expiration. The change of $0.4 million resulted from a decrease in state tax credit carry-forwards as compared to 2024.
Income Tax Audits
The 2022, 2023 and 2024 federal and state income tax returns are within the statute of limitations (“SOL”) and are not currently under examination by any federal and state tax authority. The federal SOL generally expire three years following the filing of the return or in some cases three years following the utilization or expiration of net operating loss carry forwards.
We operate in all states and the District of Columbia and are subject to various state income and franchise tax audits. The states’ SOL varies from to four years from the later of the due date of the return or the date filed. We usually file our federal and all state and local income tax returns on or before October 15 of the following year; therefore, the SOL for those states with a three-year SOL is open for calendar years ending 2022 through 2024, and for the four-year SOL states, the SOL is open for years ending from 2021 through 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2016 | Mar 2, 2017 | |
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.