Company: STGW
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0000876883-25-000009
Chunk: 154

Company: Stagwell Inc
Filing Date: 2025-03-11
Form: 10-K
Item: Item 8
Chunk 154
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 Company records a valuation allowance against deferred income tax assets when management believes it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Management evaluates all positive and negative evidence and considers factors such as the reversal of taxable temporary differences, taxable income in eligible carryback years, future taxable income, and tax planning strategies. A change to these factors could impact the estimated valuation allowance and income tax expense.The Company maintained a valuation allowance of $30.6 million as of December 31, 2024, relating to both U.S. and foreign deferred tax assets, and $26.3 million as of December 31, 2023 relating to U.S. and foreign deferred tax assets.The Company is permanently reinvested with respect to its foreign earnings in certain jurisdictions, and no deferred taxes have been recorded related to such earnings as the determination of the amount is not practicable. The Company currently does not intend to distribute previously taxed income. Upon distribution in the future, the Company may incur state and foreign withholding taxes on such income, the amount of which is not practicable to compute.As of December 31, 2024, and 2023, the Company recorded a liability for unrecognized tax benefits as well as applicable penalties and interest in the amount of $2.1 million and $1.8 million, respectively. If these unrecognized tax benefits were to be recognized, it would affect the Company’s effective tax rate.It is the Company’s policy to classify interest and penalties arising in connection with unrecognized tax benefits as a component of income tax expense. As of December 31, 2024, and 2023, accrued penalties and interest included in unrecognized tax benefits were $2.1 million and $1.8 million, respectively. A reconciliation of the change in unrecognized tax benefits exclusive of penalties and interest is as follows: 20242023A reconciliation of the change in unrecognized tax benefits is as follows:Unrecognized tax benefit - Beginning Balance$9 $2,136 Current year positions— 288 Prior period positions— (1,840)Settlements— (289)Lapse of statute of limitations— (286)Unrecognized tax benefits - Ending Balance$9 $9 It is reasonably possible that the amount of unrecognized tax benefits could decrease by less than $0.1 million in the next twelve months as a result of expiration of certain statute of limitations.The Company is subject to taxation and files income tax returns in the U