Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of Income Before Provision for Income Taxes

“Income before provision for income taxes” as shown in the accompanying Consolidated Statements of Income is comprised of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
Domestic	$	44,343	$	52,798	$	77,346
Foreign		13,422		13,366		11,516
Total	$	57,765	$	66,164	$	88,862

Schedule of Components of Provision for Income Taxes

Components of the “Provision for income taxes” in the accompanying Consolidated Statements of Income consist of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
Current
Federal	$	2,533	$	1,393	$	3,239
Foreign		4,929		4,738		5,203
State and local		1,137		700		1,169
Total current expense		8,599		6,831		9,611
Deferred expense
Federal		2,084		8,795		47,045
Foreign		(142)		12		323
State and local		368		704		563
Total deferred expense		2,310		9,511		47,931
Provision for income taxes	$	10,909	$	16,342	$	57,542

Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate

	Year Ended December 31,
	2019		2018		2017
U.S. statutory tax rate	21.0	%	21.0	%	35.0	%
Increase due to state and local taxes, net of federal benefit	3.1		3.1		2.6
Non-creditable foreign taxes	1.1		1.2		-
Foreign derived intangible income deduction	(1.5)		(1.3)		-
Income attributable to non-controlling interests	(7.2)		(7.3)		(12.5)
Uncertain Tax Positions	1.0		0.8		0.6
Other	1.4		(0.8)		(0.8)
Subtotal	18.9		16.7		24.9
Impact of TRA adjustment on NCI (a)	-		0.7		4.5
Effect of permanent difference - TRA adjustment (b)	-		(2.2)		(13.6)
Tax Reform Rate Change (c)	-		-		49.0
Valuation allowance recognized on basis step-ups	-		9.5		-
	18.9	%	24.7	%	64.8	%

(a) Reflects additional impact of non-controlling interest adjustment being on a larger base of income that includes the gain on reduction in TRA liability.

(b) Reflects the impact of gain on TRA liability reduction, which is not taxable.

(c) Reflects reduction in deferred tax assets and resulting increase in deferred tax expense due to U.S. Federal rate declining from 35% to 21%.

Summary of Deferred Tax Assets and Liabilities

	As of December 31,
	2019		2018
Long-term deferred tax assets
Goodwill, other intangibles and other assets	$	42,800	$	48,427
Imputed interest deduction pursuant to tax receivable agreements		2,651		2,719
Operating lease liabilities		1,618		1,845
Compensation and benefits		3,043		2,131
Allowance for doubtful accounts		1,629		944
Motto contingent liability		783		748
Deferred revenue		3,706		3,939
Foreign tax credit carryforward		1,862		1,259
Net operating loss		2,641		—
Other		950		1,435
Total long-term deferred tax assets		61,683		63,447
Valuation allowance (a)		(7,184)		(7,051)
Total long-term deferred tax assets, net of valuation allowance		54,499		56,396
Long-term deferred tax liabilities
Property and equipment and other long lived assets		(1,494)		(2,944)
Other		(703)		—
Total long-term deferred tax liabilities		(2,197)		(2,944)
Net long-term deferred tax assets		52,302		53,452
Total deferred tax assets and liabilities	$	52,302	$	53,452

(a) Includes a valuation allowance on deferred tax assets for goodwill and intangibles in the Company’s Western Canada operations, as well as foreign tax credit carryforwards.

Schedule of Unrecognized Tax Benefits

	As of December 31,
	2019			2018
Balance, January 1	$	4,278	$	3,703
Increase related to current period tax positions		532		575
Balance, December 31(a)	$	4,810	$	4,278