Company: LGN
Filing Date: 2025-04-30
Form Type: DRS/A
Source: 0000950123-25-003868
Chunk: 310

Company: Legence Corp.
Filing Date: 2025-04-30
Form: DRS/A
Chunk 310
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 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 future periods. During the year ended December 31, 2024, the Company’s unrecognized tax benefits increased by $7.7 million due to consolidated VIEs that were acquired in the AMA acquisition. The Company anticipates that the unrecognized tax benefits could decrease by as much as approximately $2.5 million over the next 12 months. The Company’s policy is to classify interest and penalties as income tax expense. As of December 31, 2024, the Company has interest and penalty accruals of $1.4 million and $2.9 million, respectively, related to unrecognized tax benefits, of which $1.2 million and $2.9 million, respectively, relate to consolidated VIEs that were acquired in the AMA acquisition. As of December 31, 2023, the Company had no interest or penalty accruals associated with uncertain tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows (in thousands):

|                                                                |     |   |   2024 |     |   |  2023 |     |   |  2022 |
|:---------------------------------------------------------------|:----|:--|-------:|:----|:--|------:|:----|:--|------:|
| Unrecognized tax benefits at the beginning of period           |     | $ |  2,677 |     | $ | 2,677 |     | $ | 2,677 |
| Increases based on tax positions related to the current period |     |   |      — |     |   |     — |     |   |     — |
| Increases based on tax positions related to prior periods      |     |   |  7,681 |     |   |