Company: LGN
Filing Date: 2025-08-15
Form Type: S-1
Source: 0001193125-25-181698
Chunk: 315

Company: Legence Corp.
Filing Date: 2025-08-15
Form: S-1
Chunk 315
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                                         |     |              |       — |   |     |      |     (26 | ) |
| Total deferred tax liabilities                |     |              | (56,709 | ) |     |      | (71,726 | ) |
| Net deferred tax liabilities                  |     | $            | (34,962 | ) |     | $    | (48,672 | ) |

The Company acquired additional tax attributes from prior acquisitions. As of December 31, 2024, the Company had $4.6 million of Federal net operating losses and $9.4 million of State net operating losses. The Federal net operating losses can be carried forward indefinitely. Many of the jurisdictions in which the Company has State net operating losses have an indefinite carryforward period; however, $0.1 million of State net operating losses could begin to expire as early as 2036 if not utilized. Deferred income tax (benefit) expense results from differences between assets and liabilities measured for financial reporting purposes versus income tax return purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. If a deferred tax asset is determined to be unrealizable, a valuation allowance is established. Based on this analysis, the Company has no valuation as of December 31, 2023 and recorded a valuation allowance against certain state deferred tax assets of its subsidiaries of $0.1 million as of December 31, 2024. Pursuant to Section 382 of the Internal Revenue Code, utilization of Federal net operating loss carryforwards are subject to annual limitations due to the ownership changes of prior acquisitions. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. Based on performing Section 382 studies for prior acquisitions, the Company does not expect any permanent expiration of net operating losses. As of December 31, 2024, 2023 and 2022, the Company has gross unrecognized tax benefits of $10.4 million, $2.7 million and $2.7 million, respectively, all of which would affect the effective income tax rate if recognized in F-58

Legence Holdings LLC and Subsidiaries Notes to Consolidated Financial Statements future periods. During the year ended December 31, 2024, the Company’s unrecognized tax benefits increased by $7.7 million due