TUTOR PERINI CORPTPC
TUTOR PERINI CORP Income Taxes Disclosure
Income Taxes
____________________________________________________________________________________________________
Income (loss) before income taxes is summarized as follows:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| United States operations | $ | 164,017 | $ | (261,147) | $ | (232,512) | |||||||||||
| Foreign and U.S. territory operations | 40,491 | 88,139 | 49,958 | ||||||||||||||
| Total | $ | 204,508 | $ | (173,008) | $ | (182,554) | |||||||||||
The income tax expense (benefit) is as follows:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current expense (benefit): | |||||||||||||||||
| Federal | $ | (3,661) | $ | 8,832 | $ | (178) | |||||||||||
| State | 9,856 | 3,997 | 1,888 | ||||||||||||||
| Foreign and U.S. territories | 8,371 | 14,510 | 8,153 | ||||||||||||||
| Total current expense: | 14,566 | 27,339 | 9,863 | ||||||||||||||
| Deferred expense (benefit): | |||||||||||||||||
| Federal | 44,735 | (51,758) | (48,634) | ||||||||||||||
| State | 4,648 | (24,862) | (17,612) | ||||||||||||||
| Foreign and U.S. territories | (2,522) | (1,388) | 1,426 | ||||||||||||||
| Total deferred expense (benefit): | 46,861 | (78,008) | (64,820) | ||||||||||||||
| Total expense (benefit): | $ | 61,427 | $ | (50,669) | $ | (54,957) | |||||||||||
The Company adopted ASU 2023-09 on a prospective basis beginning December 31, 2025. The following table presents the required disclosure pursuant to ASU 2023-09 and is a reconciliation of the Company's income tax expense at the statutory federal tax rate to the Company's effective tax rate for the year ended December 31, 2025:
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| (dollars in thousands) | Amount | Rate | |||||||||
| Federal income tax benefit at statutory tax rate | $ | 42,947 | 21.0 | % | |||||||
State income taxes, net of federal tax benefit(a) | 11,563 | 5.7 | |||||||||
| Foreign tax effects: | |||||||||||
| Canada: | |||||||||||
| Statutory tax rate differential | (1,547) | (0.8) | |||||||||
| Noncontrolling interests | 3,780 | 1.8 | |||||||||
| Other | (1,244) | (0.6) | |||||||||
| Commonwealth of the Northern Marianas Islands: | |||||||||||
| Gross receipts tax credit | (4,069) | (2.0) | |||||||||
| Other | (183) | (0.1) | |||||||||
| Effects of cross-border tax laws: | |||||||||||
| Foreign branch income or loss (net of foreign tax credits) | (5,451) | (2.7) | |||||||||
| Foreign flow-through income or loss | 2,298 | 1.1 | |||||||||
| Other | 47 | — | |||||||||
| Tax credits: | |||||||||||
| Research and development tax credits | (8,216) | (4.0) | |||||||||
| Other | (6) | — | |||||||||
| Changes in valuation allowances | 1,782 | 0.9 | |||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Officers' compensation | 32,576 | 15.9 | |||||||||
| Noncontrolling interests | (15,949) | (7.8) | |||||||||
| Other | 1,947 | 1.0 | |||||||||
| Changes in unrecognized tax benefits | 1,041 | 0.5 | |||||||||
| Other | 111 | 0.1 | |||||||||
| Income tax expense | $ | 61,427 | 30.0 | % | |||||||
(a)State taxes in California contributed to the majority (greater than 50%) of the tax effect in this category.
The following table presents the required disclosures prior to the adoption of ASU 2023-09 and is a reconciliation of the Company's income tax benefit at the statutory federal tax rate to the Company's effective tax rate for the years ended December 31, 2024 and 2023:
| Year Ended December 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| (dollars in thousands) | Amount | Rate | Amount | Rate | |||||||||||||||||||
| Federal income tax benefit at statutory tax rate | $ | (36,332) | 21.0 | % | $ | (38,336) | 21.0 | % | |||||||||||||||
| State income taxes, net of federal tax benefit | (16,591) | 9.6 | (10,556) | 5.8 | |||||||||||||||||||
Share-based compensation | 1,122 | (0.6) | 446 | (0.2) | |||||||||||||||||||
| Officers' compensation | 9,825 | (5.7) | 5,129 | (2.8) | |||||||||||||||||||
| Noncontrolling interests | (9,892) | 5.7 | (9,795) | 5.4 | |||||||||||||||||||
| Federal R&D credits | (750) | 0.4 | (493) | 0.3 | |||||||||||||||||||
| Foreign tax rate differences | (422) | 0.2 | (297) | 0.2 | |||||||||||||||||||
| Valuation allowance | 3,968 | (2.3) | 347 | (0.2) | |||||||||||||||||||
| Other | (1,597) | 1.0 | (1,402) | 0.6 | |||||||||||||||||||
| Income tax benefit | $ | (50,669) | 29.3 | % | $ | (54,957) | 30.1 | % | |||||||||||||||
Cash paid for income taxes (net of refunds received) by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:
| Year Ended December 31, | |||||
| (in thousands) | 2025 | ||||
| Federal | $ | (2,116) | |||
| State and local: | |||||
| California | 6,804 | ||||
| Virginia | 709 | ||||
| New York City | 532 | ||||
| Pennsylvania | (655) | ||||
| New York | (869) | ||||
| Other state and local jurisdictions | (315) | ||||
| Total state and local | 6,206 | ||||
| Foreign and U.S. territories: | |||||
| Guam | 7,450 | ||||
| Commonwealth of the Northern Marianas Islands | 900 | ||||
| Puerto Rico | 559 | ||||
| Canada | (4,303) | ||||
| Other foreign and U.S. territory jurisdictions | 9 | ||||
Total foreign and U.S. territories | 4,615 | ||||
| Total | $ | 8,705 | |||
The following is a summary of the significant components of the deferred tax assets and liabilities:
| As of December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Timing of expense recognition | $ | 67,606 | $ | 78,892 | |||||||
| Net operating losses | 117,475 | 144,148 | |||||||||
Joint ventures | 9,395 | 12,571 | |||||||||
Lease liabilities | 14,927 | 12,067 | |||||||||
| Other, net | 24,326 | 29,001 | |||||||||
| Deferred tax assets | 233,729 | 276,679 | |||||||||
| Valuation allowance | (15,789) | (14,014) | |||||||||
| Net deferred tax assets | 217,940 | 262,665 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Goodwill | (11,014) | (3,969) | |||||||||
| Intangible assets, due primarily to purchase accounting | (15,291) | (16,786) | |||||||||
| Fixed assets | (56,865) | (53,382) | |||||||||
| Construction contract accounting | (3,246) | (7,212) | |||||||||
| Joint ventures | (15,653) | (23,079) | |||||||||
Right-of-use assets | (13,573) | (10,992) | |||||||||
| Other | (5,725) | (3,956) | |||||||||
| Deferred tax liabilities | (121,367) | (119,376) | |||||||||
| Net deferred tax assets | $ | 96,573 | $ | 143,289 | |||||||
As of December 31, 2025, the Company had federal and various state net operating loss carryforwards of $286.1 million and $777.3 million, respectively. Federal net operating loss carryforwards do not have expiration dates, whereas the state net operating loss carryforwards have expiration dates ranging from 2026 to indefinite periods. As of December 31, 2024, the Company had federal and various state net operating loss carryforwards of $427.9 million and $793.6 million, respectively. As of December 31, 2025, the Company had federal and state tax credit carryforwards of approximately $11.0 million and $2.3 million, respectively. As of December 31, 2024, the Company had federal and state tax credit carryforwards of approximately $3.1 million and $4.8 million, respectively. The Company established a valuation allowance in 2025, 2024 and 2023 as a result of the uncertainty with the future realization of certain carryforwards for capital losses, foreign tax credits and state net operating losses.
The net deferred tax assets are presented in the Consolidated Balance Sheets as follows:
| As of December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets | $ | 96,573 | $ | 143,289 | |||||||
| Deferred tax liabilities | — | — | |||||||||
| Net deferred tax assets | $ | 96,573 | $ | 143,289 | |||||||
The Company’s policy is to record interest and penalties on unrecognized tax benefits as an element of income tax expense. The cumulative amounts related to interest and penalties are added to the total unrecognized tax liabilities on the balance sheet. The total amount of gross unrecognized tax benefits as of December 31, 2025 that, if recognized, would impact the effective tax rate is $5.3 million. These changes are not expected to have a material impact to the effective tax rate.
The Company accounts for its uncertain tax positions in accordance with GAAP. The following is a reconciliation of the beginning and ending amounts of these unrecognized tax benefits for the three years ended December 31:
| As of December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Beginning balance | $ | 16,868 | $ | 4,773 | $ | 7,525 | |||||||||||
| Change in tax positions of prior years | 594 | 6,756 | 438 | ||||||||||||||
| Change in tax positions of current year | 2,511 | 6,385 | (189) | ||||||||||||||
| Reduction in tax positions due to settlement with tax authorities | (7,645) | — | — | ||||||||||||||
| Reduction in tax positions for statute expirations | (1,096) | (1,046) | (3,001) | ||||||||||||||
| Ending balance | $ | 11,232 | $ | 16,868 | $ | 4,773 | |||||||||||
The Company conducts business internationally and, as a result, one or more of its subsidiaries files income tax returns in U.S. federal, U.S. state and certain foreign jurisdictions. Accordingly, in the normal course of business, the Company is subject to examination by taxing authorities principally throughout the United States, Guam and Canada. The Company's open tax years for a U.S. federal income tax audit are 2018 and later. The 2018 and 2019 federal income tax returns are currently under audit by the Internal Revenue Service. The Company has various years open to audit in a number of state and local jurisdictions and is currently under audit by various state and local taxing authorities.
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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.