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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s Consolidated Financial Statements include U.S. federal, state and local income taxes on the Company’s allocable share of the U.S. results of operations, as well as taxes payable to jurisdictions outside the U.S. In addition, certain of the Company’s entities are taxed as U.S. partnerships and are primarily subject to the UBT in New York City. Therefore, the tax liability or benefit related to the partnership income or loss, except for UBT, rests with the partners rather than the partnership entity (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” for discussion of partnership interests).
The provision for income taxes consisted of the following (in thousands):
Year Ended December 31,
202420232022
Current:
U.S. federal$19,459 $19,297 $12,949 
U.S. state and local5,061 5,033 6,147 
Foreign95,149 54,787 34,506 
UBT— 373 (390)
119,669 79,490 53,212 
Deferred:
U.S. federal(58,127)(41,491)(17,083)
U.S. state and local(9,568)(14,989)(1,596)
Foreign(2,059)(5,914)3,971 
UBT— 1,838 80 
(69,754)(60,556)(14,628)
Provision for income taxes$49,915 $18,934 $38,584 
The Company had pre-tax income (loss) of $173.1 million, $57.7 million and $97.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The Company had pre-tax income (loss) from domestic operations of $(143.2) million, $(383.9) million and $(286.8) million for the years ended December 31, 2024, 2023 and 2022, respectively. The Company had pre-tax income (loss) from foreign operations of $316.3 million, $441.6 million and $384.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Differences between the Company’s actual income tax expense and the amount calculated utilizing the U.S. federal statutory rates were as follows (in thousands):
Year Ended December 31,
202420232022
Tax expense at federal statutory rate$36,360 $12,207 $20,584 
Non-controlling interest1,295 1,982 2,366 
Incremental impact of foreign taxes compared to federal tax rate
5,847 3,838 8,122 
Other permanent differences(2,153)3,054 (10,105)
U.S. state and local taxes, net of U.S. federal benefit(4,408)(4,778)(876)
New York City UBT— — (1,071)
Other rate changes1,503 (862)153 
Impact of Corporate Conversion
— (12,446)— 
Uncertain tax positions304 (797)3,496 
U.S. tax on foreign earnings, net of tax credits(4,413)12,388 4,808 
Prior year adjustments5,811 4,078 4,189 
Valuation allowance(2,402)(4,190)(4,670)
Meals and Entertainment7,450 6,182 12,681 
Impact of RSU Windfall(4,433)(1,700)(289)
AFS MTM — U.S. GAAP Adjustment1
9,154 — — 
Other— (22)(804)
Provision for income taxes$49,915 $18,934 $38,584 
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1Available for sale securities mark-to-market — U.S. GAAP Adjustment
As of December 31, 2024, the Company’s intention is to permanently reinvest undistributed foreign pre-tax earnings in the Company’s foreign operations. While the one-time transition tax eliminated most of the income tax effects of repatriating the undistributed earnings, there could still be foreign and state and local tax effects on the distribution. Accordingly, no provision has been recorded on foreign and state and local taxes that would be applicable upon distribution of such earnings to the U.S. Further, determination of an estimate of deferred tax liability associated with the distribution of foreign earnings is not practicable.
The Company has elected to treat taxes associated with the GILTI provision using the Period Cost Method and thus has not recorded deferred taxes for basis differences under this regime as of December 31, 2024.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is deemed more likely than not that those assets will not be realized.
Significant components of the Company’s deferred tax asset and liability consisted of the following (in thousands):
Year Ended December 31,
20242023
Deferred tax asset
Basis difference of investments$10,403 $23,522 
Deferred compensation114,680 90,270 
Excess interest expense90,404 55,040 
Other deferred and accrued expenses10,659 17,625 
Depreciation and amortization
790 — 
Net operating loss and credit carry-forwards58,084 43,426 
Total deferred tax asset1
285,020 229,883 
Valuation allowance(24,422)(27,813)
Deferred tax asset, net of valuation allowance260,598 202,070 
Deferred tax liability
Depreciation and amortization— 10,618 
Total deferred tax liability1
— 10,618 
Net deferred tax asset$260,598 $191,452 
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1Before netting within tax jurisdictions.
The Company has deferred tax assets associated with net operating losses in U.S. federal, state and local, and non-U.S. jurisdictions of $2.5 million, $5.4 million and $28.4 million, respectively. These losses will begin to expire for state and local and non-U.S. jurisdictions in 2036 and 2025, respectively. The Company has deferred tax assets associated with tax credits in the U.S. of $33.7 million, which will begin to expire in 2030. Management continuously assesses the available positive and negative evidence to determine whether existing deferred tax assets will be realized. Accordingly, substantially all of the total valuation allowance of $24.4 million relates to non-US net operating losses and other deferred tax assets for the year ended December 31, 2024. The Company’s net deferred tax asset and liability are included in the Company’s Consolidated Statements of Financial Condition as components of “Other assets” and “Accounts payable, accrued and other liabilities,” respectively.
Pursuant to U.S. GAAP guidance, Accounting for Uncertainty in Income Taxes, the Company provides for uncertain tax positions as a component of income tax expense based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.
A reconciliation of the beginning to the ending amounts of gross unrecognized tax benefits for the years ended December 31, 2024 and 2023 is as follows (in thousands):
Balance, December 31, 2022$7,553 
Increases for prior year tax positions— 
Decreases for prior year tax positions(884)
Increases for current year tax positions— 
Decreases related to settlements with taxing authorities— 
Decreases related to a lapse of applicable statute of limitations
— 
Balance, December 31, 2023$6,669 
Increases for prior year tax positions— 
Decreases for prior year tax positions— 
Increases for current year tax positions— 
Decreases related to settlements with taxing authorities— 
Decreases related to a lapse of applicable statute of limitations
(2,025)
Balance, December 31, 2024$4,644 
As of December 31, 2024, the Company’s unrecognized tax benefits, excluding related interest and penalties, were $4.6 million, of which $3.7 million, if recognized, would affect the effective tax rate. The Company is currently under income tax examination by tax authorities in U.S. federal, state and local jurisdictions and certain non-U.S. jurisdictions for tax years beginning 2021, 2011 and 2017, respectively. The Company does not believe that the amounts of unrecognized tax benefits will materially change over the next 12 months.
The Company recognizes interest and penalties related to unrecognized tax benefits in “Provision (benefit) for income taxes” in the Company’s Consolidated Statements of Operations. As of December 31, 2024, the Company had accrued $4.3 million for income tax-related interest and penalties of which $0.9 million was accrued during 2024.