Note 20 – Income Taxes

As a result of the Reorganization, the operating business entities of the Company were restructured and a portion of the Company's income is subject to U.S. federal, state, local and foreign income taxes and is taxed at the prevailing corporate tax rates. Taxes Payable as of December 31, 2011 and 2010, were $5,159 and $404, respectively.

The following table presents the U.S. and non-U.S. components of Income (Loss) before income tax expense:


	For the Years Ended December 31,
	2011			2010			2009
U.S.	$	37,681		$	30,091		$	35,442
Non-U.S.		(7,039	)		(4,443	)		(16,909	)

Income before Income Tax Expense(a)	$	30,642		$	25,648		$	18,533

(a)	From continuing operations, net of Noncontrolling Interest.

The components of the provision for income taxes reflected on the Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 consist of:


	For the Years Ended December 31,
	2011			2010			2009
Current:
Federal	$	2,367		$	10,054		$	7,777
Foreign		4,447			931			1,460
State and Local		4,942			2,256			4,591

Total Current		11,756			13,241			13,828
Deferred:
Federal		11,368			3,115			2,160
Foreign		(1,129	)		(340	)		2,999
State and Local		729			161			692

Total Deferred		10,968			2,936			5,851

Total	$	22,724		$	16,177		$	19,679

A reconciliation between the statutory federal income tax rate and the Company's effective tax rate for the years ended December 31, 2011, 2010 and 2009 is as follows:


	For the Years Ended December 31,
	2011			2010			2009
Reconciliation of Federal Statutory Tax Rates
U.S. Statutory Tax Rate		35.0	%		35.0	%		35.0	%
Increase (Decrease) Due to State and Local Taxes		13.1	%		7.1	%		22.8	%
Rate Benefits as a Limited Liability Company/Flow Through		(5.7	%)		(10.2	%)		(15.6	%)
Foreign Taxes		4.3	%		0.1	%		(16.6	%)
Non-Deductible Expenses(1)		17.1	%		12.2	%		28.7	%
Valuation Allowances		(0.9	%)		0.7	%		34.0	%
Other Adjustments		(1.0	%)		(0.3	%)		1.0	%

Effective Income Tax Rate		61.9	%		44.6	%		89.3	%

(1)	Primarily related to non-deductible share-based compensation expense.

Undistributed earnings of a Brazilian subsidiary totaled $1,311 at December 31, 2011. Deferred taxes have not been provided on these undistributed earnings as the Company considers these amounts to be indefinitely reinvested to finance international growth and expansion. In the event that such amounts were ever remitted, loaned to the Company, or if the stock in the foreign subsidiary was sold, these earnings could become subject to U.S. Federal tax and an income tax provision, if any, would be recognized at that time.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Statements of Financial Condition. These temporary differences result in taxable or deductible amounts in future years. Details of the Company's deferred tax assets and liabilities as of December 31, 2011 and 2010 were as follows:


	December 31,
	2011			2010
Current Deferred Tax Assets:
Step up in tax basis due to the exchange of LP Units for Class A Shares	$	8,621		$	5,092

Total Current Deferred Tax Asset	$	8,621		$	5,092

Long-term Deferred Tax Assets:
Depreciation and Amortization	$	13,180		$	5,793
Compensation and Benefits		23,002			28,631
Step up in tax basis due to the exchange of LP Units for Class A Shares		154,574			110,228
Other		15,859			8,056

Total Long-term Deferred Tax Assets	$	206,615		$	152,708

Long-term Deferred Tax Liabilities:
Goodwill and Investments	$	11,715		$	9,994

Total Long-term Deferred Tax Liabilities	$	11,715		$	9,994

Net Long-term Deferred Tax Assets Before Valuation Allowance	$	194,900		$	142,714
Valuation Allowance		(8,211	)		(8,553	)

Net Long-term Deferred Tax Assets	$	186,689		$	134,161

The increase in net deferred tax assets, before valuation allowance, from December 31, 2010 to December 31, 2011 was primarily attributable to an increase in the tax basis of the tangible and intangible assets of Evercore LP, which resulted from the 2011 offering of Class A Shares and Members gifting LP Units to various charities. During 2011, the Company had an offering of 5,365 shares of Class A Shares. This transaction resulted in an increase in the tax basis of the tangible and intangible assets of Evercore LP, which triggered an additional liability under the tax receivable agreement that was entered into in 2006 between the Company and the LP Unit holders. The agreement provides for a payment to the LP Unit holders of 85% of the cash tax savings (if any), resulting from the increased tax benefits from the exchange and for the Company to retain 15% of such benefits. Accordingly, Deferred Tax Assets – Non-Current, Amounts Due Pursuant to Tax Receivable Agreements and Additional Paid-In-Capital increased $47,481, $40,360 and $7,122, respectively, on the Company's Consolidated Statement of Financial Condition as of December 31, 2011. See Note 14 for further discussion.

Additionally, the increase in net deferred tax assets, before valuation allowance, from December 31, 2010 to December 31, 2011 was also attributable to a $7,387 increase related to the depreciation of fixed assets and amortization of intangible assets and start-up costs associated with the ETC, Braveheart, Protego and Lexicon acquisitions.

The Company recorded an increase in deferred tax assets of $3,046 and $419 associated with changes in Accumulated Comprehensive Income (Loss) for the years ended December 31, 2011 and 2010, respectively.

In 2011 and 2010, the Company concluded that the recoverability of its deferred tax assets in certain of its foreign subsidiaries was not more-likely-than-not to be recoverable, as required by ASC 740. As a result of the assessment, the Company concluded that the net deferred tax assets of these foreign subsidiaries required a full valuation allowance. With respect to net operating loss carry-forwards associated with the foreign subsidiaries, a valuation allowance of $8,211 has been established to fully offset the associated deferred tax assets, consisting of ($342) and $197 reported in the 2011 and 2010 periods, respectively. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support its reversal.

The Company's net operating loss and tax credit carryforwards primarily relate to carryforwards of $4,168 and $27,109 in the UK and Mexico at December 31, 2011 and 2010, respectively, which may be carried forward indefinitely in the UK and until 2017 in Mexico, subject to various limitations.

A reconciliation of the changes in tax positions for the years ended December 31, 2011, 2010 and 2009 is as follows:


	December 31,
	2011			2010			2009
Beginning unrecognized tax benefit	$	2,012		$	2,728		$	1,717
Additions for tax positions of prior years		98			—			1,011
Reductions for tax positions of prior years		—			—			—
Lapse of Statute of Limitations		(1,001	)		(716	)		—

Ending unrecognized tax benefit	$	1,109		$	2,012		$	2,728

Included in the balance of unrecognized tax benefits at December 31, 2011 and 2010, are $1,085 and $1,981, respectively, of tax benefits that, if recognized, would affect the effective tax rate. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. The Company accrued interest of $136 during 2011 related to the unrecognized tax benefits noted above and, as of December 31, 2011, the Company had recognized a liability for penalties and interest of $255 and $387, respectively. The Company accrued interest and penalties of $199 and $0, respectively, during 2010 related to the unrecognized tax benefits noted above and, as of December 31, 2010, the Company had recognized a liability for penalties and interest of $561 and $717, respectively.

The Company anticipates that it is reasonably possible that the total amount of unrecognized tax benefits recorded at December 31, 2011 will decrease within 12 months by an amount up to $1,011 as a result of the lapse of the statute of limitations in various taxing jurisdictions. The Company does not anticipate a significant change in unrecognized tax positions as a result of the settlement of income tax audits for examining the Company's income tax returns during the next year.

The Company is subject to taxation in the U.S. and various state, local and foreign jurisdictions. The Company's tax years for 2008 to present are subject to examination by the taxing authorities. With a few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by taxing authorities for years before 2008.