Company: MGRC
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0000950170-25-023116
Chunk: 29

Company: MCGRATH RENTCORP
Filing Date: 2025-02-19
Form: 10-K
Item: Item 8
Chunk 29
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.7 million and $16.7 million for federal and state jurisdictions, respectively, which are expected to result in a future federal and state tax benefit of $7.1 million and $0.3 million, respectively.  The availability of these tax losses to offset future income varies by jurisdiction.  Furthermore, the ability to utilize the tax losses may be subject to additional limitations.  The Company’s federal net operating loss carryforwards have an indefinite carryforward period.  The Company’s state net operating loss carryforwards have differing carryforward periods.  The Company anticipates that the available net operating losses as of December 31, 2024, will be utilized prior to their respective expiration dates.

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In December 2016, the Company decided to exit the Bangalore, India branch operations of its TRS-RenTelco electronics division.  The wind down of operations in India began in 2017.  As a result, a valuation allowance was recorded against the deferred tax assets that resulted primarily from accumulated net operating loss carry forwards in India that management estimated the benefit of which will not be realized.  As of December 31, 2024, the Company’s foreign net operating losses for tax purposes were $0.6 million.  These loss carry forwards have expired at the end of 2024 and the associated deferred tax assets and valuation allowance have been removed.  For income tax purposes, deductible compensation related to share-based awards is based on the value of the award when realized, which may be different than the compensation expense recognized by the company for financial statement purposes which is based on the award value on the date of grant.  The difference between the value of the award upon grant, and the value of the award when ultimately realized, creates either additional tax expense or benefit.  In 2024, 2023 and 2022 exercise of share-based awards by employees resulted in an excess tax benefit of $0.9 million, $2.7 million and $2.6 million, respectively.  The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.  For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.  The Company evaluated all of its tax positions for which the statute of limitations remained open and determined there were no material