XML 28 R13.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Liabilities under Tax Receivable Agreement
 6 Months Ended
Jun. 30, 2024
Liabilities Under Tax Receivable Agreement [Abstract]  
Liabilities under Tax Receivable Agreement Liabilities under Tax Receivable Agreement
The Company is party to a Tax Receivable Agreement and each of the Continuing Equity Owners, and certain transferees of the Continuing Equity Owners have been joined as parties to the Tax Receivable Agreement (the parties entitled to payments under the Tax Receivable Agreement are referred to herein as the “TRA Parties”) that provides for the payment by the Company to the TRA Parties of 85% of the amount of tax benefits, if any, that it realizes, or in some circumstances, is deemed to realize, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of common units of FAH, LLC for Class A common stock of Funko, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement.
The Company is generally not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with a relevant transaction that gave rise to the payment are realized. Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) the generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. If the Company does not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then it would not be required to make the related Tax Receivable Agreement payments.
There were 0.9 million common units of FAH, LLC acquired during both the three and six months ended June 30, 2024. There were no common units of FAH, LLC acquired during the three and six months ended June 30, 2023.
As a result of the full valuation allowance on the deferred tax assets, and projected inability to fully utilize all or part of the related tax benefits, the Company determined that certain payments to the TRA Parties related to unrealized tax benefits under the TRA are no longer probable and estimable. Based on this assessment, the Company reduced its TRA liability as of June 30, 2023 to $9.6 million. The outstanding balance of the TRA liability as of June 30, 2024 was $9.0 million.
The following table summarizes changes in the amount of the Company’s Tax Receivable Agreement liability for the three and six months ended June 30, 2024 and 2023 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Beginning Balance$8,960 $109,182 $8,960 $109,187 
Liability reduction— (99,620)— (99,620)
Payments under tax receivable agreement— — — (5)
Ending balance $8,960 $9,562 $8,960 $9,562