INCOME TAXES

3 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

16.  INCOME TAXES

For the three months ended March 31, 2025, 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 March 31, 2025 and December 31, 2024.

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 three months ended March 31, 2025 and 2024, the Company recorded $8.3 million and ($0.9) million, respectively, of income tax expense (benefit) attributable to its TRSs.

	For the Three Months Ended
	March 31, 2025		March 31, 2024
	(dollars in thousands)
Current Tax Expense (Benefit)
Federal	$	—	$	—
State and local	13		—
Total current income tax expense (benefit)	$	13	$	—
Deferred Tax Expense (Benefit)
Federal	$	7,222	$	(824)
State and local	1,032		(119)
Total deferred income tax expense (benefit)	$	8,254	$	(943)
Total income tax expense (benefit)	$	8,267	$	(943)

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 Three Months Ended
	March 31, 2025		March 31, 2024
Statutory federal income tax rate	21.0	%	21.0	%
Non-taxable REIT income	(14.6	%)	(24.5	%)
State and local taxes	3.0	%	3.0	%
VIE and Other	(3.5	%)	0.3	%
Change in valuation allowance	—	%	—	%
Total provision	5.9	%	(0.2	%)

As of March 31, 2025, the Company recorded a net deferred tax asset of $72.6 million resulting primarily from loss carryforwards, securitization gains and unrealized losses on swaps, and a net deferred tax liability of $149.9 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 March 31, 2025, no valuation allowance was established.

As of March 31, 2025, the Company's TRSs had approximately $61.5 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 $53.6 million that can be carried forward indefinitely.

As of March 31, 2025, the Company's TRSs had approximately $31.5 million of capital loss carryforwards for federal income tax purposes which can be carried back three years and forward up to five years to offset capital gains.