Note 15 - Income Taxes

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

15.

Income Taxes

JMP Group LLC’s election to be taxed as a corporation for United States federal income tax purposes was approved by the Internal Revenue Service with an effective date of

January 1, 2019.

Taxable income derived from the investment activities of its previously untaxed pass-through entities will now be taxed at a U.S. federal and state corporate rate, along with the Company’s corporate subsidiaries.

For the

three

months ended

March 31, 2019 

and

2018,

the Company recorded income tax benefit of

$4.1

 million and benefit of

$5.6

 million, respectively. The effective tax benefit rates were

424.85%

 and

76.12%

 for the

three

months ended

March 31, 2019 

and

2018,

respectively.

For financial reporting purposes, the Company’s effective tax rate used for the interim periods is based on the estimated full-year income tax rate. The effective tax rate differs from the statutory rate primarily due to the following: (i) a change in tax status from non-taxable to taxable which resulted in recognizing the initial temporary differences between book bases and tax bases of assets and liabilities, and (ii) the executive remuneration limitation related to covered employees.

The Company recognizes deferred tax assets and liabilities in accordance with ASC

740,

Income Taxes, and are determined based upon the temporary differences between the financial reporting and tax basis of the Company

’s assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse.