Income Taxes

12 Months Ended

Dec. 31, 2019

AB Holding is a “grandfathered” publicly-traded partnership ("PTP") for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB.

The principal reasons for the difference between AB Holding’s effective tax rates and the UBT statutory tax rate of 4.0% are as follows:



	Years Ended December 31,
	2019					2018					2017
	(in thousands)
UBT statutory rate	$	10,652		4.0	%	$	10,826		4.0	%	$	9,296		4.0	%
Federal tax on partnership gross business income	27,197			10.2		27,674			10.2		24,520			10.5
State income taxes	532			0.2		576			0.2		451			0.2
Credit for UBT paid by AB	(10,652		)	(4.0	)	(10,826		)	(4.0	)	(9,296		)	(4.0	)
Income tax expense and effective tax rate	$	27,729		10.4		$	28,250		10.4		$	24,971		10.7

AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.



	Years Ended December 31,									% Change
	2019			2018			2017			2019-18		2018-17
	(in thousands)
Net income attributable to AB Unitholders	$	752,042		$	757,588		$	662,403		(0.7	)%	14.4	%
Multiplied by: weighted average equity ownership interest	35.4		%	35.7		%	35.1		%
Equity in net income attributable to AB Unitholders	$	266,292		$	270,647		$	232,393		(1.6	)	16.5

AB qualifying revenues	$	2,640,169		$	2,647,254		$	2,407,212		(0.3	)	10.0
Multiplied by: weighted average equity ownership interest for calculating tax	29.4		%	29.9		%	29.1		%
Multiplied by: federal tax	3.5		%	3.5		%	3.5		%
Federal income taxes	27,197			27,674			24,520
State income taxes	532			576			451
Total income taxes	$	27,729		$	28,250		$	24,971		(1.8	)	13.1

In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. If AB Holding were to lose its status as a “grandfathered” PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.

We recognize the effects of a tax position in the financial statements only if, as of the reporting date, it is “more likely than not” to be sustained based solely on its technical merits. In making this assessment, we assume that the taxing authority will examine the tax position and have full knowledge of all relevant information. Accordingly, we have no liability for unrecognized tax benefits as of December 31, 2019 and 2018. A liability for unrecognized tax benefits, if required, would be recorded in income tax expense and affect the company’s effective tax rate.

As of December 31, 2019, AB Holding is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2015.