INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

18. INCOME TAXES

For the year ended December 31, 2024 the Company was qualified to be taxed as a REIT under Code Sections 856 through 860. As a REIT, the Company will not incur federal income tax to the extent that it distributes its taxable income to its stockholders. To maintain qualification as a REIT, the Company must distribute at least 90% of its annual REIT taxable income to its stockholders and meet certain other requirements that relate to, among other things, assets it may hold, income it may generate and its stockholder composition. It is generally the Company’s policy to distribute 100% of its REIT taxable income.

To the extent there is any undistributed REIT taxable income at the end of a year, the Company distributes such shortfall within the next year as permitted by the Code.

The Company and certain of its direct and indirect subsidiaries, including Annaly TRS, Inc. and certain subsidiaries of joint ventures, have made separate joint elections to treat these subsidiaries as TRSs. As such, each of these TRSs is taxable as a domestic C corporation and subject to federal, state and local income taxes based upon their taxable income.

The provisions of ASC 740, Income Taxes (“ASC 740”), clarify the accounting for uncertainty in income taxes recognized in financial statements and prescribe a recognition threshold and measurement attribute for uncertain tax positions taken or expected to be taken on a tax return. ASC 740 also requires that interest and penalties related to unrecognized tax benefits be recognized in the financial statements. The Company does not have any unrecognized tax benefits that would affect its financial position. Thus, no accruals for penalties and interest were deemed necessary at December 31, 2024 and 2023.

The state and local tax jurisdictions for which the Company is subject to tax-filing obligations recognize the Company’s status as a REIT and, therefore, the Company generally does not pay income tax in such jurisdictions. The Company may, however, be subject to certain minimum state and local tax filing fees as well as certain excise, franchise or business taxes. The Company’s TRSs are subject to federal, state and local taxes. The Company’s federal, state and local tax returns from 2021 and forward remain open for examination.

During the years ended December 31, 2024, 2023 and 2022 the Company recorded $15.3 million, $39.4 million and $45.6 million, respectively, of income tax expense (benefit) attributable to its TRSs. Income tax expense (benefit) consists of the following:

	For the Years Ended
	December 31, 2024		December 31, 2023		December 31, 2022
	(dollars in thousands)
Current Tax Expense (Benefit)
Federal	$	771	$	—	$	133
State and local	240		28		115
Total current income tax expense (benefit)	$	1,011	$	28	$	248
Deferred Tax Expense (Benefit)
Federal	$	12,468	$	34,480	$	39,658
State and local	1,781		4,926		5,665
Total deferred income tax expense (benefit)	$	14,249	$	39,406	$	45,323
Total income tax expense (benefit)	$	15,260	$	39,434	$	45,571

The difference between the Company's reported income tax provision and the U.S. federal statutory rate of 21.0% and state income tax rates is as follows:

	For the Years Ended
	December 31, 2024		December 31, 2023		December 31, 2022
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
Non-taxable REIT income	(22.5	%)	(25.2	%)	(21.0	%)
State and local taxes	3.0	%	3.0	%	3.0	%
VIE and Other	—	%	(1.3	%)	(0.3	%)
Change in valuation allowance	—	%	—	%	—	%
Total provision	1.5	%	(2.5	%)	2.6	%

As of December 31, 2024, the Company recorded a net deferred tax asset of $62.9 million resulting primarily from loss carryforwards, securitization gains and unrealized losses on swaps, and a net deferred tax liability of $131.9 million resulting primarily from unrealized gains on MSR, which is included in Other assets and Other liabilities, respectively, in the Consolidated Statements of Financial Condition. As of December 31, 2024, no valuation allowance was established.

As of December 31, 2024, the Company's TRSs had approximately $50.3 million of net operating loss carryforwards for federal income tax purposes which may be available to offset future taxable income, including approximately $7.9 million of net operating loss carryforwards that are subject to an annual limitation under Internal Revenue Code Section 382 and $42.4 million that can be carried forward indefinitely.