Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Domestic and Foreign Components of Income before Income Tax Expense

The U.S. and foreign components of income before income tax expense for the years ended December 31, 2019, 2018 and 2017 are as follows:

	Year Ended December 31,
	2019			2018		2017
U.S.(1)	$	6,774		$	43,677	$	72,371
Foreign(1)		(6,653	)		7,362		(14,179	)
Total	$	121		$	51,039	$	58,192

(1) Represents the pre-tax results of the Company’s U.S. and foreign subsidiaries, not the results of the U.S. and International Business segments which are separately disclosed in Note 27. The segment results are prepared based upon the way management reviews performance.

Components of Current and Deferred Income Tax Expense

The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2019, 2018 and 2017 as determined in accordance with ASC 740, Income Taxes, are as follows:

	Years Ended December 31,
	2019			2018			2017
Current:
Federal	$	10,311		$	15,805		$	19,007
State and local		2,271			3,202			2,708
Foreign		(1,687	)		1,482			440
	$	10,895		$	20,489		$	22,155
Deferred:
Federal	$	(246	)	$	(5,318	)	$	7,947
State and local		(54	)		(1,077	)		1,105
Foreign		(49	)		312			(214	)
	$	(349	)	$	(6,083	)	$	8,838
Income tax expense	$	10,546		$	14,406		$	30,993

Reconciliation of Statutory Federal Income Tax Rate and Company's Effective Rate

A reconciliation of the statutory federal income tax expense and the Company’s total income tax expense is as follows:

	Years Ended December 31,
	2019			2018			2017
Federal income tax expense	$	25		$	10,718		$	20,367
Change in valuation allowance—Capital losses(1)		7,555			794			—
Change in valuation allowance—Foreign		4,737			3,510			5,355
Decrease in unrecognized tax benefits		(3,894	)		—			—
Foreign operations		(3,561	)		(1,041	)		(165	)
Loss/(gain) on revaluation of deferred consideration(2)		2,378			(2,570	)		—
Non-deductible executive compensation		1,608			4			—
Stock-based compensation tax (windfalls)/shortfalls		1,198			(543	)		1,035
Blended state income tax rate, net of federal benefit		237			1,406			2,234
Non-deductible acquisition and disposition-related costs		—			1,506			1,549
Other differences, net		263			622			618
Income tax expense	$	10,546		$	14,406		$	30,993

(1) The capital loss valuation allowance for the year ended December 31, 2019 is principally arising from the impairment recognized on the Company’s financial interests in AdvisorEngine (Note 8).

(2) The loss/(gain) on revaluation is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary that is based in Jersey, a jurisdiction where the Company is subject to a zero percent tax rate.

Schedule of Income Tax Payments By Jurisdiction

A summary of income taxes paid by jurisdiction for the years ended December 31, 2019, 2018 & 2017 is as follows:

	Years Ended December 31,
	2019		2018		2017
Federal	$	6,990	$	10,710	$	28,561
State and local		1,818		2,498		4,366
Foreign		1,252		1,190		186
	$	10,060	$	14,398	$	33,113

Summary of Deferred Tax Asset Recorded

A summary of the components of the Company’s deferred tax assets at December 31, 2019 and 2018 is as follows:

	December 31,
	2019			2018
Deferred tax assets:
NOLs—International	$	9,336		$	6,605
Capital losses		8,226			794
Operating lease liabilities		5,529			5,519
Accrued expenses		4,054			2,699
Stock-based compensation		1,754			2,673
Goodwill and intangible assets		1,671			1,841
NOLs—U.S.		642			762
Outside basis differences		123			—
Other		218			40
Deferred tax assets		31,553			20,933
Deferred tax liabilities:
Right of use assets—operating leases		4,400			4,335
Fixed assets and prepaid assets		1,326			1,433
Unrealized gains		744			724
Deferred tax liabilities		6,470			6,492
Total deferred tax assets less deferred tax liabilities		25,083			14,441
Less: valuation allowance		(17,685	)		(7,399	)
Deferred tax assets, net	$	7,398		$	7,042

Schedule of Changes in Balance of Gross Unrecognized Tax Benefits

The table below sets forth the aggregate changes in the balance of gross unrecognized tax benefits:

	Total			Unrecognized Tax Benefits			Interest and Penalties
Balance on January 1, 2018	$	—		$	—		$	—
Accrued in connection with the ETFS Acquisition		38,488			31,317			7,171
Increases		346			—			346
Foreign currency translation(1)		(3,958	)		(3,216	)		(742	)
Balance at December 31, 2018	$	34,876		$	28,101		$	6,775
Decrease—Lapse of statute of limitations		(4,309	)		(2,999	)		(1,310	)
Increases		416			—			416
Foreign currency translation(1)		1,118			896			222
Balance at December 31, 2019	$	32,101		$	25,998		$	6,103

(1) The gross unrecognized tax benefits were accrued in British pounds.