Income Taxes

3 Months Ended

May 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income taxes have been provided for based upon the tax laws and rates in countries in which our operations are conducted and income is earned. In December 2023, the Government of Bermuda enacted the Bermuda Corporate Income Tax Act which imposes a 15% corporate current income tax effective for tax years beginning on or after January 1, 2025. The Company expects to be subject to Bermuda corporate current income tax with respect to its fiscal year beginning March 1, 2025 and subsequent years. Consequently, the provision for income taxes relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily the United States and Ireland.

The sources of income from continuing operations before income taxes and earnings of our unconsolidated equity method investment for the three months ended May 31, 2024 and 2023 were as follows:

	Three Months Ended May 31,
	2024		2023
U.S. operations	$	4,996	$	4,282
Non-U.S. operations	14,138		32,442
Income from continuing operations before income taxes and earnings of unconsolidated equity method investment	$	19,134	$	36,724

Our aircraft-owning subsidiaries generally earn income from sources outside the United States and typically are not subject to U.S. federal, state or local income taxes. The aircraft owning subsidiaries resident in the United States and Ireland are subject to tax in those respective jurisdictions.

We have a U.S.-based subsidiary which provides management services to our subsidiaries and is subject to U.S. federal, state and local income taxes. We also have Ireland and Singapore-based subsidiaries which provide management services to our non-U.S. subsidiaries and are subject to tax in those respective jurisdictions.

We recognized income tax provisions of $3.6 million and $14.4 million for the three months ended May 31, 2024 and 2023, respectively. Our effective tax rate for the three months ended May 31, 2024 and 2023 was 18.7% and 39.1%, respectively. The decreases are primarily attributable to the mix of profits in taxable and non-taxable jurisdictions.