XML 46 R22.htm IDEA: XBRL DOCUMENT v3.23.3
Income Taxes
 9 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

(16) Income Taxes

Following the closing of the Merger on June 30, 2023, BT HoldCo will be treated as a partnership for U.S. federal income tax purposes. As such, BT HoldCo’s earnings and losses will flow through to its partners, including Bitcoin Depot Inc., a U.S. corporation.

The effective tax rate for the three months ended September 30, 2023 and 2022, respectively was (24.0%) and 60.8% and during the nine months ended September 30, 2023 and 2022, respectively was 45.1% and 26.7%. During the three months ended September 30, 2023 and 2022, the Company recognized income tax benefit (expense) of ($0.3) million and $1.3 million, respectively, on its share of pre-tax book income (loss), of which $0.2 million and $0 million was attributed to non-controlling interest. During the nine months ended September 30, 2023 and 2022, respectively, the Company recognized income tax benefit (expense) of $1.0 million and $0.9 million on its share of pre-tax book income, of which ($0.7) million and $0 were attributed to non-controlling interest, respectively.

BitAccess Inc. and Express Vending, Inc. are taxed as Canadian corporations. For the nine months ended September 30, 2023 and 2022, there was no activity for Mintz Assets, Inc., Intuitive Software, LLC and Digital Gold. As such, there were no federal income taxes for these entities. BitAccess Inc. and Express Vending, Inc., recorded income tax benefits of $0.8 million and $1.4 million, respectively. The amount related to BitAccess Inc. was allocated in accordance with the ownership interest with a portion allocated to non-controlling interest.

The effective tax rate differs from the statutory U.S. federal rate of 21.0% primarily due to the income or loss not being taxed due to the income and loss flowing through to its partners, and differences related to the foreign operations, valuation allowance adjustments and book-tax adjustments relating to share-based compensation.

As of September 30, 2023, management determined based on applicable accounting standards and the weight of all available evidence, it was not more likely than not (“MLTN”) that the Company will realize its deferred tax assets for the difference in tax basis in excess of the financial reporting value for its investment in BT HoldCo. Consequently, the Company has established a full valuation allowance with respect to its deferred tax asset related to its investment in BT HoldCo, as of September 30, 2023.

In the event that management subsequently determines that it is MLTN that the Company will realize its deferred tax assets in the future over the recorded amount, a decrease to the valuation allowance will be made, which will reduce the provision for income

taxes. Additionally, the Company has an uncertain tax position of $0.3 million due to state tax filings. The Company plans to settle open filings during 2023.

Tax Receivable Agreement

Upon the completion of the Merger, Bitcoin Depot is party to the Tax Receivable Agreement (“TRA”). Under the terms of that agreement, Bitcoin Depot generally will be required to pay BT Assets 85% of the tax savings, if any, that Bitcoin Depot Inc. realizes, or in certain circumstances is deemed to realize, as a result of certain tax attributes that are created as part of and after the Merger. The payment of cash consideration to BT Assets in connection with the transaction will result in aggregate payments under the Tax Receivable Agreement of approximately $0.8 million as of September 30, 2023. This amount does not take into account any future exchanges of BT HoldCo Common Units by BT Assets pursuant to the BT HoldCo Amended and Restated Limited Liability Company Agreement. The future amounts payable, as well as the timing of any payments, under the Tax Receivable Agreement are dependent upon significant future events, including (but not limited to) the timing of the exchanges of BT HoldCo Common Units and surrender of a corresponding number of shares of Bitcoin Depot Class V common stock, the price of Bitcoin Depot Class A common stock at the time of each exchange, the extent to which such exchanges are taxable transactions, the depreciation and amortization periods that apply to any increase in tax basis resulting from such exchanges, the types of assets held by BT HoldCo, the amount and timing of taxable income Bitcoin Depot generates in the future, the U.S. federal income tax rate then applicable and the portion of Bitcoin Depot’s payments under the Tax Receivable Agreement that constitute imputed interest or give rise to depreciable or amortizable tax basis. The Company has recognized a Tax Receivable Agreement liability of $0.8 million on the Consolidated Balance Sheets as of September 30, 2023. Changes in this liability will be recognized in future periods through the income tax (expense) benefit caption on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).