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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Taxes |
Income Taxes |
9. | Income Taxes
​ Deferred income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates currently in effect. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. ​ The following summarizes Income tax (benefit) expense for the years ended December 31: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
in thousands |  | 2024 |  | 2023 |  | 2022
Current | ​ | $ | — | ​ | $ | ​ | ​ | $ | —
Deferred | ​ | ​ | — | ​ | ​ | (2,187) | ​ | ​ | 3,469
Total | ​ | $ | — | ​ | $ | (2,187) | ​ | $ | 3,469
​ Reconciliation of the Income tax (benefit) expense if computed at the U.S. federal statutory income tax rate to the Company’s reported Income tax (benefit) expense for the years ended December 31 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
in thousands |  | 2024 |  | 2023 |  | 2022 | ​
Loss before income taxes | ​ | $ | (152,625) | ​ | $ | (840,252) | ​ | $ | (107,808) | ​
U.S. federal statutory tax rate | ​ | ​ | 21 | % | ​ | 21 | % | ​ | 21 | %
Tax (benefit) expense computed at the U.S. federal statutory rate | ​ | ​ | (32,051) | ​ | ​ | (176,453) | ​ | ​ | (22,640) | ​
State income tax (benefit) expense, net of federal income tax | ​ | ​ | (5,257) | ​ | ​ | (75,917) | ​ | ​ | (10,254) | ​
Unbenefited losses | ​ | ​ | 20,159 | ​ | ​ | 35,791 | ​ | ​ | 36,270 | ​
Valuation allowance | ​ | ​ | (187,982) | ​ | ​ | 213,127 | ​ | ​ | — | ​
Tax basis adjustment from spin off | ​ | ​ | 206,525 | ​ | ​ | - | ​ | ​ | — | ​
Tax (Benefit) expense from other changes in rates, prior period adjustments and other permanent difference | ​ | ​ | (1,394) | ​ | ​ | 1,265 | ​ | ​ | 93 | ​
Income tax (benefit) expense | ​ | $ | (0) | ​ | $ | (2,187) | ​ | $ | 3,469 | ​
Effective income tax rate | ​ | ​ | 0.0 | % | ​ | 0.3 | % | ​ | (3.2) | %
​ The Company generated operating losses in the years presented. The income tax benefit recognized related to this loss was zero for the years ended December 31, 2024, 2023, and 2022, after an assessment of the available positive and negative evidence. Before August 1, 2024 operating results of the Company have historically been included in the consolidated federal and combined state income tax returns of HHH and the resulting tax attributes have been fully utilized by HHH and are no longer available to the Company for future use. As a result, any net operating loss attributes and related valuation allowances are deemed to have been distributed to HHH through net parent investment. Future income tax provisions may be impacted by future changes in the realizability of the hypothetical net operating loss deferred tax asset. The difference between the (benefit) expense at the statutory rate and the income tax provision related to these operating losses is reflected in the table above as “Unbenefited losses”. ​ Starting on August 1, 2024 the Company will file its own separate return and the Company has considered realizability of deferred tax assets on a standalone basis. At December 31, 2024, the Company has $29.7 million of net operating loss carryforwards for federal income tax purposes, which are available to offset future taxable income, if any, over an indefinite period. In addition, the Company has $22.6 million of net operating loss carryforwards for New York and New York City income tax purposes, which expire starting in 2045. ​ Furthermore, it was necessary to assess the positive and negative evidence of the realizability of the US federal and consolidated state net deferred tax asset balance for the years ended December 31, 2024 and 2023. After such an assessment, it was determined a valuation allowance was required. The difference between the expense (benefit) at the statutory rate and the income tax provision is primarily related to state taxes, the unbenefited federal and state losses, and the valuation allowance recorded against the Company’s deferred tax assets. ​ The following summarizes tax effects of temporary differences and carryforwards included in the net deferred tax liabilities as of December 31: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
in thousands |  | 2024 |  | 2023
Deferred tax assets: | ​ | ​ | ​ | ​ | ​ | ​
Accounts receivable | ​ | $ | 447 | ​ | $ | 408
Accrued expenses | ​ | ​ | 2,634 | ​ | ​ | 1,041
Operating lease liabilities | ​ | ​ | 14,348 | ​ | ​ | 14,547
Deferred income | ​ | ​ | 645 | ​ | ​ | 537
Depreciation, impairments and asset disposals | ​ | ​ | 11,581 | ​ | ​ | 210,168
Net operating losses | ​ | ​ | 8,969 | ​ | ​ | -
Total deferred tax assets | ​ | ​ | 38,624 | ​ | ​ | 226,701
Valuation allowance | ​ | ​ | (25,145) | ​ | ​ | (213,127)
Total net deferred tax assets | ​ | $ | 13,479 | ​ | $ | 13,574
​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Prepaid other | ​ | ​ | (947) | ​ | ​ | (286)
Operating lease right of use assets | ​ | ​ | (12,532) | ​ | ​ | (13,288)
Total deferred tax liabilities | ​ | $ | (13,479) | ​ | $ | (13,574)
Total net deferred tax liabilities | ​ | $ | — | ​ | $ | —
​ The Company has historically been included in the income tax returns filed by HHH; that is no longer the case and it now files its own separate company return beginning August 1, 2024. Generally, the Company is currently open to audit under the statute of limitations by the Internal Revenue Service as well as state taxing authorities for the years ended December 31, 2021 through 2024. In the Company’s opinion, it has made adequate tax provisions for years subject to examination. The final determination of tax examinations and any related litigation could be different from what was reported on the returns, however, the Company would not be liable for any incremental taxes payable, interest or penalties, which remain the obligation of HHH. ​ The Company applies the generally accepted accounting principle related to accounting for uncertainty in income taxes, which prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition issues. ​ The Company recognizes and reports interest and penalties related to unrecognized tax benefits, if applicable, within the provision for income tax expense. The Company had no unrecognized tax benefits for the years ended December 31, 2024, 2023, or 2022, and therefore did not recognize any interest expense or penalties on unrecognized tax benefits.

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