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$WBI
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10-Q
Nov 12, 12:23 PM ET
WaterBridge Infrastructure LLC 10-Q
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Contents
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In connection with the Combination and the merger of WB 892 LLC (“WB 892”), a Delaware limited liability company, with and into the Company, the Company recorded a net deferred tax asset of $133.2 million. The deferred tax asset is attributable to net operating losses (“NOLs”) historically generated at WB 892, future imputed interest deductions (“TRA Imputed Interest”) associated with the Tax Receivable Agreement (the “TRA”) entered into by the Company with OpCo and the Legacy Owners (each such person and its permitted transferees, a “TRA Holder” and collectively, the “TRA Holders”), and the difference between the Company’s outside basis in its investment in OpCo compared to its share of the net financial statement carrying value of the assets of OpCo. The NOL carryforwards have an indefinite life and are expected to be subject to annual limitations under the provisions of Section 382 of the Internal Revenue Code. The Company recognizes deferred tax assets to the extent it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. Based on these factors, we determined that the deferred tax asset established in connection with the Combination is more likely than not to be recognized; therefore, no valuation allowance was recorded. The initial deferred tax asset of $108.6 million for NOL carryforwards, $13.9 million for the TRA Imputed Interest, and $10.7 million for the investment in OpCo are recorded against Class A shares in the condensed consolidated statements of shareholders’ and member’s equity.
On July 4, 2025, H.R. 1, commonly referred to as the One Big Beautiful Bill Act (“OBBB”), was enacted in the U.S., which includes a broad range of tax reform provisions, including extending and modifying certain key provisions (both domestic and international) in the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. We have evaluated the full effects of the legislation and determined that the legislation has a material impact on our financials statements, particularly as it relates to full expensing of certain qualifying tangible personal property, as well as changes to the interest limitation computations. The impacts of the legislation are considered in our provision for income taxes for the nine months ended September 30, 2025.