Quarterly report [Sections 13 or 15(d)]

INCOME TAXES

v3.25.2
INCOME TAXES
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Our effective tax rate for the three months ended June 30, 2025 decreased to 22.8% compared to 24.6% in the same period of 2024 (22.4% year to date compared to 25.9% in 2024). The year-over-year decrease in our effective tax rate in the quarter and year-to-date periods was driven by the valuation allowance release discussed below, prior year share-based compensation shortfalls, prior year unfavorable changes in uncertain tax positions and non-deductible expenses related to regulatory matters that did not recur in the current period.
As of December 31, 2024, we maintained a full valuation allowance of $105 million against our U.S. capital loss deferred tax asset. Each quarter, we assess the available positive and negative evidence to determine whether it is more likely than not that the capital losses will be realized. As of June 30, 2025, we have released $18 million of valuation allowance as a result of net capital gains incurred year to date and expected from the planned building disposals discussed in note 17 to the unaudited, consolidated financial statements. We believe there is a reasonable possibility that within the next 12 months additional positive evidence of capital gain generation may become available that would result in the release of an amount of additional valuation allowance and a corresponding decrease to income tax expense. The exact timing and amount of any valuation release are subject to change as we continue to evaluate our network.
In July 2025, the One Big Beautiful Bill Act was signed into law. This legislation includes changes to U.S. federal tax law, which may be subject to further clarification and the issuance of interpretive guidance. We are assessing the legislation and its effect in our consolidated financial statements, which we expect to begin reflecting in our consolidated financial statements in the three months ending September 30, 2025.