Company: ACTG
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000934549-25-000021
Chunk: 122

Company: ACACIA RESEARCH CORP
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 8
Chunk 122
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 is recorded.Our income tax expense for the three months ended March 31, 2025 is primarily attributable to the statutory rate applied to our year to date earnings. Our income tax benefit for the three months ended March 31, 2024 is primarily attributable to recognizing an income tax benefit on losses incurred year-to-date offset by foreign withholding taxes. The Company's effective tax rates was slightly lower than the U.S. federal statutory rate primarily due to non-controlling partnership earnings allocated to minority shareholders. 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 March 31, 2025 and December 31, 2024. These assets primarily consist of foreign tax credits and state net operating loss carryforwards.

18

At March 31, 2025 and December 31, 2024, the Company had total unrecognized tax benefits of approximately $935,000. At March 31, 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 March 31, 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 liability for unrecognized benefits will change significantly within the next 12 months. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months.Recent Accounting PronouncementsRecently AdoptedIn December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid. ASU 2023-09 requires entities on an annual basis (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative