Company: INTG
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006758
Chunk: 47

Company: INTERGROUP CORP
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 47
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 of the outcomes of such matters
could materially impact our consolidated financial statements. We evaluate tax positions taken or expected to be taken on a tax return
to determine whether they are more likely than not of being sustained, assuming that the tax reporting positions will be examined by
taxing authorities with full knowledge of all relevant information, prior to recording the related tax benefit in our consolidated financial
statements. If a position does not meet the more likely than not standard, the benefit cannot be recognized. Assumptions, judgment, and
the use of estimates are required in determining if the “more likely than not” standard has been met when developing the
provision for income taxes. A change in the assessment of the “more likely than not” standard with respect to a position
could materially impact our consolidated financial statements.

The
Company and its subsidiary Portsmouth, compute and file income tax returns and prepare discrete income tax provisions for financial reporting.
The income tax expense during the three months ended December 31, 2024 and 2023 represents primarily the combined income tax effect of
Portsmouth’s pretax loss which includes the net loss from the Hotel and the pre-tax loss from InterGroup (standalone). InterGroup
and Portsmouth file their respective income tax returns on a calendar year basis.

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DEFERRED
INCOME TAXES – VALUATION ALLOWANCE

We
assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that
some or all of our deferred tax assets are not realizable. This assessment is completed by tax jurisdiction and relies on the weight
of both positive and negative evidence available, with significant weight placed on recent financial results. Cumulative pre-tax losses
for the three-year period are considered significant objective negative evidence that some or all of our deferred tax assets may not
be realizable. Cumulative reported pre-tax income is considered objectively verifiable positive evidence of our ability to generate positive
pre-tax income in the future. In accordance with GAAP, when there is a recent history of pre-tax losses, there is little or no weight
placed on forecasts for purposes of assessing the recoverability of our deferred tax assets. When necessary, we use systematic and logical
methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse
and generate tax deductions. Assumptions, judgment, and the use of estimates are required when scheduling the reversal of deferred tax
assets and liabilities, and the exercise is