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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The following table details the Company’s provision for income taxes:
|  |  | Year Ended December 31,
|  |  |  |  | 2023 |  | 2022 |  | 2021
Current |  |  |  |  |  |  |  |  |
Federal |  |  |  |  | $ | 240 |  |  | $ | (162) |  |  | $ | 8,936 |
State |  |  |  |  | 139 |  |  | 846 |  |  | 3,120 |
Total current |  |  |  |  | 379 |  |  | 684 |  |  | 12,056 |
Deferred |  |  |  |  |  |  |  |  |
Federal |  |  |  |  | (27,512) |  |  | (66,624) |  |  | 26,623 |
State |  |  |  |  | (15,663) |  |  | (13,652) |  |  | 4,692 |
Total deferred |  |  |  |  | (43,175) |  |  | (80,276) |  |  | 31,315 |
Total (benefit) provision for income taxes |  |  |  |  | $ | (42,796) |  |  | $ | (79,592) |  |  | $ | 43,371 |
The following table is a reconciliation of the estimated provision for income taxes at statutory rates to the provision for income taxes at the Company’s effective tax rate:
|  |  | Year Ended December 31,
|  |  | 2023 |  |  |  | 2022 |  |  |  | 2021
Federal income tax at statutory rate |  |  | 21.0 | % |  |  |  | 21.0 | % |  |  |  | 21.0 | %
State and local income taxes (net of federal benefit) |  |  | 2.8 |  |  |  |  | 3.0 |  |  |  |  | 0.9 |
Non-controlling interests |  |  | (9.5) |  |  |  |  | (10.3) |  |  |  |  | (16.2) |
Goodwill impairment |  |  | — |  |  |  |  | (0.6) |  |  |  |  | — |
State rate change |  |  | 1.9 |  |  |  |  | (1.5) |  |  |  |  | — |
Change in valuation allowance |  |  | 0.1 |  |  |  |  | (0.1) |  |  |  |  | — |
Other, net |  |  | (0.9) |  |  |  |  | — |  |  |  |  | 0.8 |
Effective income tax rate |  |  | 15.4 | % |  |  |  | 11.5 | % |  |  |  | 6.5 | %
The Company’s income tax expense varies from the expense that would be expected based on statutory rates due principally to income passed through to noncontrolling interests. Prior to the IPO, income taxes for LD Holdings at the consolidated level were primarily federal, state, and local taxes for ACT, a C Corporation. Subsequent to the IPO, the Company became a C Corporation subject to federal, state, and local income taxes with respect to its share of net taxable income of LD Holdings. Temporary differences and carryforwards that give rise to deferred tax assets and liabilities are comprised of the following:
| December 31,
| 2023 |  | 2022
Deferred tax assets: |  |  |
Accrued compensation | $ | 16 |  |  | $ | 41 |
Net operating loss | 87,978 |  |  | 70,010 |
Tax credits | 421 |  |  | 447 |
Depreciation | 8 |  |  | 7 |
Acquired intangible assets | 157 |  |  | — |
Charitable contributions carryover | 83 |  |  | — |
Gross deferred tax assets before valuation allowance | 88,663 |  |  | 70,505 |
Valuation allowance | (314) |  |  | (386) |
Net deferred tax assets | 88,349 |  |  | 70,119 |
Deferred tax liabilities: |  |  |
Outside basis difference | 166,544 |  |  | 191,437 |
Acquired intangible assets | — |  |  | 145 |
Total deferred tax liabilities | 166,544 |  |  | 191,582 |
Net deferred tax liabilities | $ | (78,195) |  |  | $ | (121,463) |
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. The deferred tax liability as of December 31, 2023 relates to temporary outside basis differences in the book basis as compared to the tax basis of loanDepot, Inc.’s investment in LD Holdings, net of tax benefits from future deductions for payments made under the TRA as a result of the offering transaction. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company’s effective tax rate in the future. Deferred income taxes are measured using the applicable tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on the tax rates that have been enacted at the reporting date. The Company measured its deferred tax assets and liabilities at December 31, 2023 and 2022 using the combined federal and state rate (less federal benefit) of 26.2% and 27.4%, respectively. The Company establishes a valuation allowance when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. In determining the need for a valuation allowance, the Company considered all negative and positive evidence. As of December 31, 2023, the Company established a valuation allowance on tax credits that have a limited carryforward period and may expire prior to the Company being able to utilize them. The Company did not establish a valuation allowance for the remaining deferred tax assets as the Company believes it is more-likely-than not that the Company will realize the benefits of the deferred tax assets. The Company recognized a TRA liability of $57.3 million and $50.7 million as of December 31, 2023 and 2022, respectively, which represents the Company’s estimate of the aggregate amount that it will pay under the TRA as a result of the offering transaction, refer to Note 19- Commitments and Contingencies, for further information on the TRA liability. Uncertain tax positions relate to various federal and state income tax matters. The income tax returns for 2019-2023 are subject to examination by the relevant taxing authorities. There was no interest or penalties related to uncertain tax positions for the years ended December 31, 2023, 2022, and 2021, respectively. A reconciliation of the beginning and ending amount of uncertain tax positions is as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Beginning balance | $ | 497 |  |  | $ | 654 |  |  | $ | — |
Increases related to positions taken during prior years | — |  |  | — |  |  | 540 |
Increases related to positions taken during the current year | — |  |  | — |  |  | 114 |
Increases related to positions settled with tax authorities | 212 |  |  | — |  |  | — |
Decreases due to a lapse of applicable statute of limitations | (70) |  |  | (157) |  |  | — |
Ending balance | $ | 639 |  |  | $ | 497 |  |  | $ | 654 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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