Company: LGN
Filing Date: 2025-12-09
Form Type: S-1
Source: 0001193125-25-312729
Chunk: 296

Company: Legence Corp.
Filing Date: 2025-12-09
Form: S-1
Chunk 296
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likely than not that a portion or all of a deferred tax asset will not be realized. Management evaluates the realizability of deferred tax assets by considering all available positive and negative evidence, including forecasted taxable income,
charter of deductions, reversals of taxable temporary differences, and tax planning strategies. As of September 30, 2025, the deferred tax asset related to the Company’s investment in Legence Holdings would only be fully realized upon the
sale of the Company’s interest in Legence Holdings. Accordingly, a full valuation allowance has been recorded against the deferred tax asset associated with this investment. As of September 30, 2025, a partial valuation allowance was also
recorded against the deferred tax asset associated with the TRA payments. Refer to “Note 14—Tax Receivable Agreement” for additional information.

On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was enacted into law. The Act includes significant changes to the U.S. tax code,
including restoration of immediate recognition of domestic research and development expenditures and reinstatement of 100% bonus depreciation for qualifying property. The Act also removes the deductions under Code Section 179D for
energy-efficient commercial buildings, effective for properties where construction begins after June 30, 2026. Additionally, the Act eases the limitation on interest expense deductions by allowing companies to calculate their income for 163(j)
purposes before deducting depreciation and amortization. The Company incorporated the estimated effects of the legislation within its financial statements for the three and nine months ended September 30, 2025, which did not have a material
impact on its annualized effective tax rate. While the Company’s current estimates do not result in a material impact, the ultimate effect will depend on a number of factors, including the issuance of regulatory guidance and further
interpretation of the legislation. The Company will continue to monitor development and evaluate the impact of the Act on its condensed consolidated financial statements, including the effects on its deferred tax assets and liabilities, and will
recognize any required adjustments in the period in which the analysis is complete and the impacts can be quantified with reasonable certainty.

Note 16 - Segment Information

The Company reports its results under two reportable segments: 1) Engineering & Consulting, and 2)
Installation & Maintenance. Segments are presented according to the nature of the business activities, and reflect the Company’s consideration of financial information provided to the chief executive officer, who is the chief
operating decision