Company: ACTG
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000934549-25-000042
Chunk: 87

Company: ACACIA RESEARCH CORP
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 87
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 for the three months ended June 30, 2025 is primarily attributable to additional year-to date tax expense related to decreased benefit from non-controlling interest income from subsidiaries. Our income tax expense for the six months ended June 30, 2025 is primarily attributable to the statutory rate applied to our year-to date earnings and foreign withholding taxes for which a foreign tax credit cannot be benefited.  

Our 2024 effective tax rate in each period was higher than the U.S. federal statutory rate primarily due to favorable permanent book tax differences offset by foreign withholding taxes, which we could not recognize as a foreign tax credit. Our income tax benefit for the three and six months ended June 30, 2024 is primarily attributable to recognizing an income tax benefit on losses incurred offset by foreign withholding taxes.

The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of net operating loss carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets.

The Company has recorded a partial valuation allowance against our net deferred tax assets as of June 30, 2025 and December 31, 2024 on foreign tax credits and certain state net operating losses. 

At June 30, 2025 and December 31, 2024, the Company had total unrecognized tax benefits of approximately $935,000. At June 30, 2025 and December 31, 2024, $935,000 of unrecognized tax benefits were recorded in other long-term liabilities. No interest and penalties have been recorded for the unrecognized tax benefits for the periods presented. At June 30, 2025, if recognized, $935,000 of tax benefits would impact the Company’s effective tax rate subject to valuation allowance. The Company does not expect that the long-term liability for unrecognized benefits will change significantly within the next 12 

59

months. The Company recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax