TIPTREE INC

The following table presents the Company’s provision (benefit) for income taxes reflected as a component of income (loss):

(1) Higher than the U.S. federal statutory income tax rate of 21% primarily due to the impact of outside basis deferred taxes on Tiptree’s investment in Fortegra and other discrete items.

Tiptree owns less than 80% of Fortegra and is required to record deferred taxes on the outside basis on its investment in Fortegra. This deferred tax liability represents the tax that would be due, before consideration of loss carryforwards, if Tiptree were to sell all of its Fortegra stock at its carrying value on Tiptree’s balance sheet.

For the three months ended June 30, 2024, the deferred tax liability relating to Fortegra increased by 6,001, of which $356 of benefit was recorded in OCI, and 6,357 expense was recorded as a provision for income taxes. For the three months ended June 30, 2023, the deferred tax liability relating to Fortegra increased by $2,232, of which $24 of benefit was recorded in OCI, $1,222 benefit was recorded directly in stockholders’ equity, and $3,478 expense was recorded as a provision for income taxes. Excluding the impact of these deferred taxes, the effective tax rates for the three months ended June 30, 2024 and 2023 were 30.3% and 35.3%, respectively.

For the six months ended June 30, 2024, the deferred tax liability relating to Fortegra increased by $9,931, of which $891 of benefit was recorded in OCI, and $10,822 expense was recorded as a provision for income taxes. For the six months ended June 30, 2023, this deferred tax liability relating to Fortegra was $46,346, which was an increase of $6,376 from the year ended December 31, 2022, of which $1,784 expense was recorded in OCI, $1,222 benefit was recorded directly in stockholders’ equity, and $5,814 expense was recorded as a provision for income taxes. Excluding the impact of these deferred taxes, the effective tax rates for the six months ended June 30, 2024 and 2023 were 30.8% and 34.6%, respectively.

On April 15, 2024, the Company sold its 16.98 million shares of Invesque for $625 of proceeds resulting in a capital loss carryforward for tax purposes of approximately $106,768.

The Organization for Economic Cooperation and Development (“OECD”) has introduced a framework to implement a global minimum corporate tax rate of 15%, commonly referred to as Pillar Two. Many aspects of Pillar Two are effective beginning calendar year 2024 and other aspects will be effective beginning in calendar year 2025. While it is uncertain whether the U.S. will adopt Pillar Two, certain countries in which the Company operates have adopted legislation and other countries are in the process of introducing legislation to implement Pillar Two. While we do not expect Pillar Two to have a material impact on the Company, our analysis is ongoing as the OECD releases additional guidance and countries implement additional legislation.