XML 39 R23.htm IDEA: XBRL DOCUMENT v3.25.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 13 – INCOME TAXES

We have elected to be taxed as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as TRS entities, which are subject to federal, state and foreign income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this note. Certain REIT entities are subject to foreign income tax.

Although we intend to continue to operate in a manner that will enable us to qualify as a REIT, such qualification depends upon our ability to meet, on a continuing basis, various distribution, stock ownership and other tests. Our tax treatment of distributions per common share was as follows:
For the Years Ended December 31,
202520242023
Tax treatment of distributions:   
Ordinary income$— $— $— 
Qualified ordinary income0.11407 — 0.04468 
199A qualified business income1.69367 1.09580 1.49465 
Long-term capital gain— — 0.09136 
Non-dividend distribution0.08226 0.70420 0.16931 
Distribution reported for 1099-DIV purposes1.89000 1.80000 1.80000 
Add: Dividend declared in current year and taxable in following year0.48000 0.45000 0.45000 
Less: Dividend declared in prior year and taxable in current year(0.45000)(0.45000)(0.45000)
Distribution declared per common share outstanding$1.92000 $1.80000 $1.80000 

We believe we have met the annual REIT distribution requirement by payment of at least 90% of our estimated taxable income for 2025, 2024 and 2023. Our consolidated benefit for income taxes was as follows (dollars in thousands):
For the Years Ended December 31,
202520242023
Current - Federal $366 $324 $534 
Current - State6,993 2,630 2,564 
Deferred - Federal (39,355)(30,436)(6,135)
Deferred - State(397)28 230 
Current - Foreign2,658 2,646 2,587 
Deferred - Foreign15,585 (12,967)(9,319)
Total$(14,150)$(37,775)$(9,539)

The 2025 income tax benefit is primarily due to losses in certain of our TRS entities and a $15.0 million net change in valuation allowances. The 2024 income tax benefit is primarily due to losses in certain of our TRS entities and a $28.6 million change in valuation allowance due to purchase accounting activities. The 2023
income tax benefit is primarily due to losses in certain of our TRS entities and a $3.2 million benefit from internal restructurings of U.S. TRS entities.

Although the TRS entities and certain other foreign entities have paid minimal cash federal, state and foreign income taxes for the year ended December 31, 2025, their income tax liabilities may increase in future years as we exhaust net operating loss (“NOL”) carryforwards and as our operations grow. Such increases could be significant.

For the year ended December 31, 2025, we have elected to prospectively adopt the guidance in ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, or ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (dollars in thousands):

For the Year Ended December 31,
2025
$
%
Income from continuing operations before unconsolidated entities, noncontrolling interest and income taxes
$204,321 
US Federal Income Tax42,907 21.0 
Nontaxable and nondeductible items
Nontaxable REIT Income(58,407)(28.6)
Prior year reconciliation
(3,550)(1.7)
Other(1,094)(0.5)
Change in valuation allowance(15,700)(7.7)
Domestic state and local income taxes, net of federal effect438 0.2 
Foreign tax effects
Canada
Statutory income tax rate differential1,325 0.6 
Provincial income taxes6,565 3.2 
Change in valuation allowance12,693 6.2 
Other(561)(0.3)
United Kingdom
Statutory income tax rate differential(566)(0.3)
Non-deductible depreciation, interest and other
1,658 0.8 
Other1420.1 
Income tax benefit
$(14,150)(7.0)%

The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective rate for years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU No. 2023-09 (dollars in thousands):
For the Years Ended December 31,
20242023
Tax at statutory rate on earnings from continuing operations before unconsolidated entities, noncontrolling interest and income taxes$(1,679)$(24,272)
State income taxes, net of federal benefit2,641 (839)
Change in valuation allowance(10,593)20,330 
Tax at statutory rate on earnings not subject to federal income taxes(18,773)(7,809)
Foreign rate differential and foreign taxes1,813 43 
Change in tax status of TRS— 9,171 
Other differences(11,184)(6,163)
Income tax benefit
$(37,775)$(9,539)
The majority (greater than 50%) of the effect of the state and local income tax category was attributable to Texas, California, and Illinois.

The amounts of cash taxes paid by Ventas Inc, are as follows (dollars in thousands):
For the Years Ended December 31,
20252024
US Federal
$250 $(49)
US State and Local
Texas1,750 1,560 
California850 — 
Illinois650 — 
Oregon
384 435 
Philadelphia, PA— 700 
Other
1,441 393 
5,075 3,088 
Foreign
United Kingdom1,985 — 
Other
41
1,9891
Total income taxes paid, net of amounts refunded
$7,314 $3,040 

Each TRS is a tax-paying component for purposes of classifying deferred tax assets and liabilities. The tax effects of temporary differences and carryforwards included in the net deferred tax liabilities are summarized as follows (dollars in thousands):
As of December 31,
202520242023
Property, primarily differences in depreciation and amortization, the tax basis of land assets and the treatment of interests and certain costs
$(65,936)$(73,214)$(26,071)
Operating loss and interest deduction carryforwards219,489 236,424 233,847 
Expense accruals and other66,769 56,546 26,700 
Valuation allowance(240,935)(225,975)(257,222)
Net deferred tax liabilities $(20,613)$(6,219)$(22,746)

Our net deferred tax liability increased $14.4 million during 2025 primarily due to the utilization of NOLs by our TRS entities. Our net deferred tax liability decreased $16.5 million during 2024 primarily due to the
impact of operating losses at certain TRS entities and an increase in deferred tax assets of $18.0 million due to tax law changes in Canada regarding the deductibility of interest and financing expenses. Our net deferred tax liability decreased $1.7 million during 2023 primarily due to the impact of operating losses at certain TRS entities and the reversal of $3.2 million of net deferred tax liabilities from an internal restructuring of TRS entities, partially offset by an increase of $12.4 million in connection with our equitization of the Santerre Mezzanine Loan on May 1, 2023.

Due to uncertainty regarding the realization of certain deferred tax assets, we have established valuation allowances, primarily in connection with the NOL carryforwards related to certain TRSs. The amounts related to NOLs at the TRS entities for 2025, 2024 and 2023 are $162.5 million, $180.8 million and $179.0 million, respectively.

We are subject to corporate-level taxes (“built-in gains tax”) for any asset dispositions during the five-year period immediately after the assets were owned by a C corporation (either prior to our REIT election, through stock acquisition or merger). The amount of income potentially subject to built-in gains tax is generally equal to the lesser of the excess of the fair value of the asset over its adjusted tax basis as of the date it became a REIT asset or the actual amount of gain. Some, but not all, future gains could be offset by available NOL carryforwards.

At December 31, 2025, 2024 and 2023, the REIT had NOL carryforwards of $1.0 billion, $1.0 billion and $1.1 billion, respectively. Additionally, the REIT has $10.8 million of federal income tax credits that were carried over from acquisitions at December 31, 2025, 2024 and 2023. These amounts can be used to offset future taxable income (or taxable income for prior years if an audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. Certain NOL and credit carryforwards are limited as to their utilization by Section 382 of the Code. The remaining REIT carryforwards began to expire in 2023.

For the years ended December 31, 2025 and 2024, the net difference between tax bases and the reported amount of REIT assets and liabilities for federal income tax purposes was approximately $1.4 billion and $1.8 billion, respectively, less than the book bases of those assets and liabilities for financial reporting purposes.

Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service (“IRS”) for the year ended December 31, 2022, and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2021 and subsequent years. We are subject to audit generally under the statutes of limitation by the Canada Revenue Agency and provincial authorities with respect to the Canadian entities for the year ended December 31, 2021 and subsequent years. We are subject to audit in the United Kingdom generally for the periods ended in and subsequent to 2024.

The following table summarizes the activity related to our unrecognized tax benefits (dollars in thousands):
20252024
Balance as of January 1$3,963 $5,205 
Additions to tax positions related to prior years115 — 
Subtractions to tax positions related to prior years— (1,242)
Balance as of December 31$4,078 $3,963 

If recognized, these unrecognized tax benefits of $4.1 million and $4.0 million at December 31, 2025 and 2024, respectively, would reduce our annual effective tax rate. We accrued no interest or penalties related
to the unrecognized tax benefits during 2025. We do not expect our unrecognized tax benefits to increase or decrease materially in 2026.

As a part of the transfer pricing structure in the normal course of business, the REIT enters into transactions with certain TRSs, such as leasing and sub-management transactions, other capital financing and allocation of general and administrative costs, which transactions are intended to comply with the IRS and foreign tax authority transfer pricing rules.