Income Taxes

9 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are the sole managing member of RMR LLC. We are a corporation subject to U.S. federal and state income tax with respect to our allocable share of any taxable income of RMR LLC and its tax consolidated subsidiaries. RMR LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, RMR LLC is generally not subject to U.S. federal and most state income taxes. Any taxable income or loss generated by RMR LLC is passed through to and included in the taxable income or loss of its members, including RMR Inc. and ABP Trust, based on each member’s respective ownership percentage.

For the three months ended June 30, 2022 and 2021, we recognized estimated income tax expense of $2,943 and $3,361, respectively, which includes $2,162 and $2,467, respectively, of U.S. federal income tax and $781 and $894, respectively, of state income taxes. For the nine months ended June 30, 2022 and 2021, we recognized estimated income tax expense of $8,448 and $8,109, respectively, which includes $6,205 and $5,953, respectively, of U.S. federal income tax and $2,243 and $2,156, respectively, of state income taxes.

A reconciliation of the statutory income tax rate to the effective tax rate is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Income taxes computed at the federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	3.1	%	3.2	%	3.1	%	3.2	%
Permanent items	0.6	%	0.9	%	0.4	%	0.7	%
Net income attributable to noncontrolling interest	(10.1)	%	(10.1)	%	(10.1)	%	(10.1)	%
Other (1)	—	%	—	%	—	%	(0.9)	%
Total	14.6	%	15.0	%	14.4	%	13.9	%

(1)     In December 2020, the Internal Revenue Service and Department of Treasury released final regulations which, among other clarifications, established the effective date as it relates to limitations on the deductibility of certain executive compensation. The final regulations provide that the application of the limit applies to deductions after December 18, 2020. As such, during the three months ended December 31, 2020, we reduced our provision for income taxes for limitations applied prior to the effective date by $520, or $0.02 per diluted share.

ASC 740, Income Taxes, provides a model for how a company should recognize, measure and present in its financial statements uncertain tax positions that have been taken or are expected to be taken with respect to all open years and in all significant jurisdictions. Pursuant to this topic, we recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50.0% likely to be realized upon settlement. As of June 30, 2022 and 2021, we had no uncertain tax positions.