Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

6.INCOME TAXES

The following table presents the U.S. and non‑U.S. components of income (loss) before income tax expense:

	For the Year Ended December 31,
	2021		2020		2019
U.S.	$	468,725	$	264,047	$	156,983
Non-U.S.		67,588		6,066		(9,478	)
Income (loss) before income taxes	$	536,313	$	270,113	$	147,505

The current and deferred components of the income tax provision for the years ended December 31, 2021, 2020, and 2019 are as follows:

	For the Year Ended December 31,
	2021			2020		2019
Current income taxes:
Federal	$	63,979		$	8,207	$	4,527
State and Local		15,875			2,955		3,212
Foreign		10,619			1,517		409
	$	90,473		$	12,679	$	8,148
Deferred income taxes:
Federal	$	20,811		$	31,773	$	3,084
State and Local		4,295			7,122		613
Foreign		(2,244	)		101		(32	)
Total	$	113,335		$	51,675	$	11,813

The total provision for income taxes differs from the amount which would be computed by applying the appropriate statutory rate to income before income taxes as follows:

	For the Year Ended December 31,
	2021		2020		2019
Reconciliation of federal statutory tax rates
U.S. statutory tax rate	21.0	%	21.0	%	21.0	%
Increase (decrease) due to state and local taxes	3.6	%	3.7	%	4.3	%
Rate benefit as a U.S. limited partnership/flow through	-2.3	%	-3.1	%	-4.4	%
Excess tax benefit from equity compensation delivery	-3.4	%	-2.6	%	-11.9	%
Foreign taxes	1.3	%	0.0	%	-0.4	%
Non-deductible expenses	2.2	%	1.1	%	0.8	%
Other	-1.3	%	-1.0	%	-1.4	%
Effective income tax rate	21.1	%	19.1	%	8.0	%

Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount in the Company’s consolidated statements of financial condition. These temporary differences result in taxable or deductible amounts in future years.

The significant components of deferred tax assets and liabilities included on the Company’s consolidated statements of financial condition are as follows:

	For the Year Ended December 31,
	2021			2020
Net operating loss	$	9,867		$	9,751
Step-up in tax basis in Group LP assets		384,080			369,216
Deferred compensation		63,778			56,628
Lease liability		43,479			43,214
Other		12,631			—
		513,835			478,809
Valuation allowance on NOL and other		(18,368	)		(10,445	)
Deferred tax asset	$	495,467		$	468,364
Right-of-use asset	$	(37,117	)	$	(38,862	)
Other		(10,227	)		(5,157	)
Deferred tax liability	$	(47,344	)	$	(44,019	)
Net deferred tax asset	$	448,123		$	424,345

The Company recorded an increase in the net deferred tax asset of $23,778 for the twelve months ended December 31, 2021, which was primarily attributable to an increase in the step-up in tax basis in Group LP assets in connection with the exchanges of Group LP partnership units for Class A common stock during 2021, partially offset by the amortization of tax basis in the Group LP assets. Approximately $22,249 of this deferred tax asset is attributable to exchanges by certain partners of Group LP who are party to the tax receivable agreement. Pursuant to this agreement, 85% (or $18,912) of the tax benefits associated with this portion of the deferred tax asset are payable to such exchanging partners over the next 15 years and recorded as amount due pursuant to tax receivable agreement in the consolidated statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital. The Company also recorded an increase in the deferred tax asset related to deferred compensation.

As of December 31, 2021, the Company had accumulated net foreign operating loss carryforwards related to its international operations of approximately $38,989 for which it has recorded a deferred tax asset of $9,867. Approximately $38,836 of the operating losses (or $9,828 of the deferred tax asset) has an indefinite life and $153 of the operating losses (or $39 of the deferred tax asset) will expire in 2027.

The Company’s operations are generally comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities generally represent obligations of their interest holders. The Company is subject to certain foreign, state and local entity-level taxes (for example, the New York City Unincorporated Business Tax ("UBT")). In addition, the Company is subject to U.S. corporate federal, state and local income tax on its allocable share of results of operations from Group LP.

The Company’s tax years for 2020, 2019 and 2018 are generally subject to examination by the tax authorities as of December 31, 2021. The Company does not expect any material changes in its tax provision related to any outstanding current examinations as of December 31, 2021. Tax examinations are monitored on an ongoing basis and adjustments to tax liabilities are made as appropriate.

The Company has no unrecognized tax benefits for the periods ended December 31, 2021, 2020 and 2019.