Lineage Inc

(8)Income taxes

The Company’s provision for income taxes is based upon an estimated annual tax rate for the year applied to U.S. federal, U.S. state, and foreign income. Significant discrete items that are not consistent from period to period are recorded to Income tax expense (benefit) in the quarter in which they occur.

The Company’s effective tax rate for the three and nine months ended September 30, 2024 was 7.7% and 6.7%, respectively. The Company’s effective tax rate for the three and nine months ended September 30, 2023 was 9.1% and 17.0%, respectively. The annual effective tax rates differ from the U.S. statutory rate primarily due to the Company operating as a REIT for U.S. federal income tax purposes, the differences in tax rates at which foreign income is taxed, and certain nondeductible expenses, income tax credits, and changes in valuation allowance.

During the three months ended September 30, 2024, the Company released a valuation allowance established on deferred tax assets attributable to existing net operating losses carryforwards and tax credits in the U.S., resulting in an income tax benefit of $24 million, recorded in Deferred income tax liability on the condensed consolidated balance sheets. The release of the valuation allowance was due to the Company’s internal restructurings. In assessing the realizability of the Company’s deferred tax assets and the appropriateness of the remaining valuation allowances, management continues to consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies. There is a reasonable possibility that within the next twelve months, sufficient positive or negative evidence may become available to allow the Company to reach a conclusion that would warrant a change in our valuation allowance positions, and any related changes will be recorded in the period such a determination is made.