Income Taxes

3 Months Ended

Mar. 31, 2020

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.

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.



	Three Months Ended March 31,
	2020			2019			% Change
	(in thousands)
Net income attributable to AB Unitholders	$	194,320		$	149,114		30.3	%
Multiplied by: weighted average equity ownership interest	36.0		%	35.3		%
Equity in net income attributable to AB Unitholders	$	69,914		$	52,638		32.8

AB qualifying revenues	$	702,340		$	586,550		19.7
Multiplied by: weighted average equity ownership interest for calculating tax	30.6		%	29.6		%
Multiplied by: federal tax	3.5		%	3.5		%
Federal income taxes	7,515			6,081
State income taxes	140			118
Total income taxes	$	7,655		$	6,199		23.5

Effective tax rate	10.9		%	11.8		%

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) engage in 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.