Income Taxes

12 Months Ended

Dec. 31, 2024

Components of Income Tax Expense (Benefit), Continuing Operations [Abstract]

Income Taxes

NOTE 25 – Income Taxes

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2024			2023		2022
Current taxes:
Federal	$	177,076		$	127,771	$	159,383
State		51,192			39,361		49,956
Foreign		(565	)		1,056		929
		227,703			168,188		210,268
Deferred taxes:
Federal		(26,804	)		9,067		8,752
State		(4,456	)		2,917		4,203
Foreign		622			3,984		(262	)
		(30,638	)		15,968		12,693
Provision for income taxes	$	197,065		$	184,156	$	222,961

Reconciliation of the statutory federal income tax rate with our company’s effective income tax rate is as follows (in thousands):

	Year Ended December 31,
	2024			2023			2022
Statutory rate	$	194,973		$	148,405		$	185,874
State income taxes, net of federal income tax		35,986			34,012			42,813
Non-deductible business expenses		16,857			25,177			10,944
Change in valuation allowance		10,565			21,931			9,802
Foreign tax rate difference		(3,104	)		(2,471	)		(2,846	)
Federal tax credits		(14,396	)		(7,002	)		(2,793	)
Excess tax benefit from stock-based compensation		(44,717	)		(31,109	)		(19,418	)
Other, net		901			(4,787	)		(1,415	)
	$	197,065		$	184,156		$	222,961

Tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and liabilities (in thousands):

	December 31,
	2024			2023
Deferred tax assets:
Lease liabilities	$	222,808		$	205,487
Deferred compensation		90,083			82,593
Receivable reserves		55,467			52,342
Unrealized loss on investments		54,706			51,549
Net operating loss carryforwards		56,882			45,879
Accrued expenses		35,782			15,457
Total deferred tax assets		515,728			453,307
Valuation allowance		(57,250	)		(46,843	)
		458,478			406,464
Deferred tax liabilities:
Lease right-of-use assets		(207,821	)		(195,962	)
Goodwill and other intangibles		(81,569	)		(72,927	)
Prepaid expenses		(8,031	)		(6,966	)
Depreciation		(5,069	)		(3,620	)
Other		(3,610	)		(5,467	)
		(306,100	)		(284,942	)
Net deferred tax asset	$	152,378		$	121,522

Our net deferred tax asset at December 31, 2024, includes net operating loss carryforwards of $159.4 million that expire between 2025 and 2043. Certain of our net operating loss carryforwards do not expire. A valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized. The valuation allowance was increased by $10.4 million. We believe the realization of the remaining net deferred tax asset of $152.4 million is more likely than not based on the ability to carry back certain tax attributes against prior year taxable income for tax years before 2024 and to carry forward net operating losses indefinitely after 2024, and expectations of future taxable income, which is supported by a history of cumulative income.

The current tax payable, included in accounts payable and accrued expenses, is $5.8 million and $6.1 million as of December 31, 2024 and 2023, respectively. The current tax receivable, included in other assets, is $30.1 million and $38.9 million as of December 31, 2024 and 2023, respectively.

As of December 31, 2024, we considered all undistributed earnings of non-U.S. subsidiaries to be permanently reinvested. Therefore, we have not provided for any U.S. deferred income taxes. Because the time or manner of repatriation is uncertain, we cannot determine the impact of local taxes, withholding taxes and foreign tax credits associated with the future repatriation of such earnings, and therefore cannot quantify the tax liability that would be payable in the event all such foreign earnings are repatriated.

Uncertain Tax Positions

As of December 31, 2024 and 2023, we had $5.5 million and $5.4 million, respectively, of gross unrecognized tax benefits, all of which, if recognized, would impact the effective tax rate. We recognize interest and penalties related to uncertain tax positions in provision for income taxes in the consolidated statements of operations. As of December 31, 2024 and 2023, we had accrued interest and penalties of $0.3 million and $0.4 million, respectively, before benefit of federal tax deduction, included in accounts payable and accrued expenses in our consolidated statements of financial condition. The amount of interest and penalties recognized in our consolidated statements of operations for the years ended December 31, 2024, 2023, and 2022, was not significant.

The following table summarizes the activity related to our company’s unrecognized tax benefits from January 1, 2022 to December 31, 2024 (in thousands):

	Year Ended December 31,
	2024			2023			2022
Beginning balance	$	5,430		$	5,271		$	4,924
Increase related to prior year tax positions		428			112			195
Decrease related to prior year tax positions		(324	)		(63	)		(635	)
Increase related to current year tax positions		1,072			1,083			978
Decrease related to settlements with taxing authorities		(499	)		—			—
Decrease related to lapsing of statute of limitations		(602	)		(973	)		(191	)
Ending balance	$	5,505		$	5,430		$	5,271

We file income tax returns with the U.S. federal jurisdiction, various states, and certain foreign jurisdictions. We are not subject to U.S. federal examination for taxable years before 2021. We are not subject to certain state and local, or non-U.S. income tax examinations for taxable years before 2015.

There is a reasonable possibility that the unrecognized tax benefits will change within the next 12 months as a result of the expiration of various statutes of limitations or for the resolution of U.S. federal and state examinations, but we do not expect this change to be material to the consolidated financial statements.