Company: ALIT
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001809104-25-000175
Chunk: 116

Company: Alight, Inc. / Delaware
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 116
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 and (iii) certain other tax benefits related to entering into the TRA.Actual tax benefits realized by Alight may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. While the amount of existing tax basis, the anticipated tax basis adjustments and the actual amount and utilization of tax attributes, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, we expect that the payments that Alight may make under the TRA will be substantial.The Company’s TRA liability established upon completion of the Business Combination is measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The TRA liability balance at March 31, 2025 assumes: (i) a blended U.S. federal, state and local income tax rate of 26.3%; (ii) no material changes in tax law; (iii) the ability to utilize tax attributes based on current tax forecasts; and (iv) future payments under the TRA are made when due under the TRA. The amount of the expected future payments under the TRA has been discounted to its present value using a discount rate of 7.9%. 

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Subsequent to the Business Combination, we record additional liabilities under the TRA as and when Class A units of Alight Holdings are exchanged for Class A Common Stock. Liabilities resulting from these exchanges will be recorded on a gross undiscounted basis and are not remeasured at fair value on a recurring basis. During the three months ended March 31, 2025, there were no significant exchanges. As such, no additional TRA liability was established as a result of the exchanges. During the three months ended March 31, 2024, an additional TRA liability of $85 million was established as a result of exchanges. As of March 31, 2025, $533 million of the TRA liability was measured at fair value on a recurring basis and $233 million was undiscounted and not remeasured at fair value. The following table summarizes the changes in the TRA liabilities (in millions):Tax Receivable Agreement Liability Beginning balance as of December 31, 2024$857 Fair value remeasurement9 Payments(100)Ending balance as of March 31, 2025766 Less: current portion included in other