Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

Income Taxes

Schedule of components of the Company's income tax expense

The components of the Company’s income tax (benefit) expense from operations for the years ended December 31, 2024, 2023 and 2022 consisted of (in thousands):

	2024		2023		2022
Current:
Federal	$	880	$	9,123	$	44,613
State		689		1,558		11,170
Deferred:
Federal		(10,377)		(11,173)		28,543
State		(2,569)		(3,035)		27,957
Income tax (benefit) expense	$	(11,377)	$	(3,527)	$	112,283

Schedule of reconciliation of income tax expense from operations to the federal statutory rate

A reconciliation of income tax (benefit) expense from operations to the federal statutory rate for the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):

	2024		2023		2022
Income taxes computed at federal statutory rate(1)	$	(18,955)	$	10,374	$	94,524
State income taxes – net of federal benefit(1)		(1,774)		(2,645)		8,362
Other differences:
State and local taxes on pass-through entities		674		1,948		3,736
Income taxes computed at the effective federal and state statutory rate for pass-through entities not subject to tax for the Company(2)		9,411		(3,927)		(53,461)
Effect of LLC Conversion(3)		—		(85,790)		208,833
(Decrease) increase in valuation allowance(4)		(1,568)		64,351		(151,058)
Impact of other state tax rate changes		(241)		4,900		967
Accrual to return		420		8,314		(1,135)
Tax credits		(501)		(582)		(743)
Uncertain Tax Positions		(128)		(547)		1,519
Other		1,285		77		739
Income tax (benefit) expense	$	(11,377)	$	(3,527)	$	112,283

(1) Federal and state income tax includes $0.6 million and $0.1 million of income tax expense relating to the revaluation in the Tax Receivable Agreement liability due to fluctuations in state income tax rates for 2023, and 2022, respectively. There were no changes to the Tax Receivable Agreement liability due to fluctuations in state tax rate for the year ended December 31, 2024.

(2) The related income is taxable to the non-controlling interest.

(3) For 2023, these amounts represent a reduction of $81.7 million to CWH’s outside basis deferred tax assets as a result of the LLC Conversion and $4.1 million related to the entity classification election, which was filed in the third quarter of 2023 with an effective date of January 2, 2023 (defined and discussed below). For 2022, these amounts represent the tax impact of the LLC Conversion, which is comprised of a $209.4 million adjustment to CW’s deferred tax assets inclusive of tax operating losses, net of a $0.6 million reduction to CWH’s outside basis deferred tax asset.

(4) For 2024, the decrease in valuation allowance was primarily related to utilization of a portion of the capital loss carryforward. For 2023, the valuation allowance increased by $64.4 million. The valuation allowance increased by $132.2 million related to capital loss carryforward. Additionally, valuation allowance decreased by $52.5 million as a result of the LLC Conversion and its impact on realization of the CWH’s outside basis deferred tax asset and decreased by $15.3 million for activities not related to the LLC Conversion. For 2022, these amounts include a $180.4 million decrease in valuation allowance associated with the LLC Conversion, partially offset by $16.8 million of increases to the valuation allowance for activity not related to the LLC conversion, which is primarily

resulting from losses of CW for which no benefit is recognized for the U.S. federal and non-unitary states. Additionally, the valuation allowance increased by $12.5 million associated with CWH’s outside basis deferred tax asset in CWGS, LLC.

Summary of significant items comprising the net deferred tax asset

Significant items comprising the net deferred tax assets at December 31, 2024 and 2023 were (in thousands):

	2024		2023
Deferred tax liabilities
Operating lease assets	$	(6,068)	$	(5,375)
Other		(105)		(101)
		(6,173)		(5,476)
Deferred tax assets
Investment in partnership ("Outside Basis Deferred Tax Asset")(1)		216,572		194,764
Capital loss carryforward		131,371		132,248
Tax Receivable Agreement liability		37,639		40,702
Operating lease liabilities		6,482		5,678
Business interest expense carryforward		21,164		5,597
Net operating loss and tax credit carryforward		17,472		2,061
Other investments		17,011		17,011
Other reserves		1,207		1,195
		448,918		399,256
Valuation allowance		(227,605)		(192,686)
Net deferred tax assets	$	215,140	$	201,094

(1) This amount is the deferred tax asset the Company recognizes for its book to tax basis difference in its investment in CWGS, LLC.