The accompanying consolidated financial statements include U.S. federal, state and local income taxes on Newmark’s allocable share of its U.S. results of operations, as well as taxes payable to jurisdictions outside the U.S. In addition, certain of Newmark’s entities are taxed as U.S. partnerships and are subject to the Unincorporated Business Tax (“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 (See Note 2 — “Limited Partnership Interests in Newmark Holdings and BGC Holdings”, for discussion of partnership interests) rather than the partnership entity. Income taxes are accounted for using the asset and liability method, as prescribed in U.S. GAAP guidance for Income Taxes. The provision for income taxes consisted of the following (in thousands):


	Year Ended December 31,
	2020		2019		2018
Current:
U.S. federal	$	24,880	$	63,359	$	49,985
U.S. state and local	6,038		15,130		19,290
Foreign	2,811		464		1,239
UBT	2,845		1,335		3,586
Total	36,574		80,288		74,100
Deferred:
U.S. federal	3,249		(25,103)		(9,972)
U.S. state and local	(1,912)		(4,025)		24,092
Foreign	(120)		(15)		—
UBT	(798)		1,291		2,267
Total	419		(27,852)		16,387
Provision for income taxes	$	36,993	$	52,436	$	90,487

Newmark had pre-tax income of $146.3 million, $214.1 million and $282.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. Newmark had pre-tax loss from foreign operations of $4.5 million, $6.4 million and $3.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.


	Year Ended December 31,
	2020		2019		2018
Tax expense at federal statutory rate	$	30,717	$	44,971	$	59,297
Non-controlling interest	(10,378)		(15,097)		(26,257)
Incremental impact of foreign taxes compared to the federal rate	212		(145)		44
Other permanent differences	5,272		9,915		9,948
U.S. state and local taxes, net of U.S. federal benefit	5,984		12,271		13,353
New York City UBT	2,046		2,627		3,119
Amortization of intangibles	—		—		—
Revaluation of deferred taxes related to tax reform	—		—		—
Other rate change	(4,747)		2,457		23,001
Section 453A interest	1,419		1,640		2,003
Valuation allowance	2,137		2,902		1,281
Prior year true ups	4,628		(7,981)		2,341
Other	(297)		(1,124)		2,357
Provision for income tax	$	36,993	$	52,436	$	90,487

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 basis. 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.


	December 31,
	2020		2019
Deferred tax asset
Basis difference of investments	$	65,954	$	54,445
Deferred compensation	167,251		153,978
Other deferred and accrued expenses	4,584		7,655
Net Operating loss and credit carry-forwards	2,447		4,216
Total deferred tax asset	240,236		220,294
Valuation Allowance	(2,035)		(3,973)
Deferred tax asset, net of allowance	238,201		216,321
Deferred tax liability
Depreciation and amortization	50,675		30,156
Other	—		3,384
Deferred tax liability(1)	50,675		33,540
Net deferred tax asset	$	187,526	$	182,781

Newmark has net operating losses in non-U.S. jurisdictions of an approximate tax effected value of $2.2 million, which has an indefinite life. Management assesses the available positive and negative evidence to determine whether existing deferred tax assets will be realized. Accordingly, a valuation allowance of $2.0 million has been recorded against the deferred tax asset primarily related to certain net operating losses in non-U.S. jurisdictions as it is more likely than not to not be realized. Newmark’s deferred tax asset and liability are included on the accompanying consolidated balance sheets as components of “Other assets” and “Other liabilities”, respectively.

The Global Intangible Low-Taxed Income (“GILTI”) provision on its foreign subsidiaries did not have a material impact on Newmark’s tax expense for the year ended December 31, 2020.

Pursuant to U.S. GAAP guidance on Accounting for Uncertainty in Income Taxes, Newmark provides for uncertain tax positions 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, 2020, 2019 and 2018 is as follows (in thousands):


Balance, January 1, 2018	$	208
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	—
Balance, December 31, 2019	208
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	—
Balance, December 31, 2020	$	208

As of December 31, 2020, Newmark’s unrecognized tax benefits, excluding related interest and penalties, were $0.2 million, which, if recognized, would affect the effective tax rate. Newmark is currently open to examination by United States Federal, state and local and non-U.S. tax authorities as part of the BGC consolidated group for tax years beginning 2008, 2009 and 2015, respectively. Newmark does not believe that the amounts of unrecognized tax benefits will materially change over the next 12 months. Generally, Newmark is not subject to examination by taxing authorities prior to 2017.

Newmark recognizes interest and penalties related to uncertain tax positions in “Provision for income taxes” on the accompanying consolidated statements of operations. As of December 31, 2020, Newmark has not accrued any tax-related interest and penalties.