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INCOME TAXES | 3 Months Ended
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Mar. 31, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax expense (benefit) consists of the following:
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |
Federal | $ | 6,555 |  |  | $ | 613 |  |  |  |  |  |  |
State and local | 197 |  |  | 396 |  |  |  |  |  |  |
Foreign | 10,613 |  |  | 1,775 |  |  |  |  |  |  |
Total current income tax expense | 17,365 |  |  | 2,784 |  |  |  |  |  |  |
Deferred: |  |  |  |  |  |  |  |  |
Federal | (30,358) |  |  | 76,453 |  |  |  |  |  |  |
State and local | (9,296) |  |  | 13,237 |  |  |  |  |  |  |
Foreign | (1,641) |  |  | 938 |  |  |  |  |  |  |
Total deferred income tax expense (benefit) | (41,295) |  |  | 90,628 |  |  |  |  |  |  |
Total Income Tax Expense (Benefit) | $ | (23,930) |  |  | $ | 93,412 |  |  |  |  |  |  |
Rithm Capital intends to qualify as a REIT for each of its tax years through December 31, 2025. A REIT is generally not subject to U.S. federal corporate income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements. Rithm Capital operates various business segments, including Origination and Servicing, Asset Management and portions of the Investment Portfolio, through TRSs that are subject to regular corporate income taxes, which have been provided for in the provision for income taxes, as applicable. Refer to Note 4 for further details. As of March 31, 2025, Rithm Capital recorded a net deferred tax liability of $744.8 million, primarily composed of deferred tax liabilities generated through the deferral of gains from residential mortgage loans sold by the origination business and changes in fair value of MSRs, offset partially by deferred tax assets related to net operating losses and tax deductible goodwill. The net deferred tax liability is reported within accrued expenses and other liabilities in the consolidated balance sheets. In assessing the realizability of deferred tax assets, Rithm Capital considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. During the quarter, the Company increased the valuation allowance on definite-lived deferred tax assets by $44.5 million, including federal and state net operating losses and foreign tax credits. The change was driven primarily by changes to taxable income forecasts. The valuation allowance as of March 31, 2025 was $78.3 million.

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