Income/(loss

) before Income Tax Expense

–

Domestic and Foreign

The U.S. and foreign components of income/(loss) before income tax expense for the years ended December 31, 2022, 2021 and 2020 are as follows:


	Year Ended December 31,
	2022			2021		2020
U.S.	$	(4,067	)	$	15,986	$	(5,187	)
Foreign		44,017			40,685		(30,035	)

Total	$	39,950		$	56,671	$	(35,222	)

Income Tax Expense/(Benefit) – By Jurisdiction

The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2022, 2021 and 2020 are as follows:


	Years Ended December 31,
	2022			2021			2020
Current:
Federal	$	4,685		$	5,857		$	3,670
State and local		1,415			1,538			832
Foreign		(15,538	)		(837	)		(1,877	)

	$	(9,438	)	$	6,558		$	2,625


Deferred:
Federal	$	(6	)	$	(1,217	)	$	60
State and local		(1	)		(251	)		13
Foreign		(1,289	)		1,784			(2,265	)

	$	(1,296	)	$	316		$	(2,192	)

Income tax expense/(benefit)	$	(10,734	)	$	6,874		$	433

Reconciliation of Statutory Federal Income Tax Rate to the Effective Income Tax 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,
	2022			2021			2020
U.S. federal statutory income tax	$	8,386		$	11,901		$	(7,397	)
Decrease in unrecognized tax benefits, net		(19,871	)		(4,998	)		(5,661	)
Change in valuation allowance – Capital losses		4,761			5			4,448
Change in tax-related indemnification assets, net		4,173			1,053			1,189
Foreign operations		(2,919	)		(3,211	)		(3,342	)
Change in valuation allowance—Foreign net operating losses (“NOLs”) and interest carryforwards		(1,609	)		—			(2,018	)
(Gain)/loss on revaluation of deferred consideration (1)		(5,842	)		(424	)		11,929
GILTI		499			—			—
Non-deductible executive compensation		789			881			399
Stock-based compensation tax shortfalls		507			647			1,485
Blended state income tax rate, net of federal benefit		(134	)		526			(171	)
Non-taxable gain on sale—Canadian ETF business		—			—			(740	)
Other differences, net		526			494			312

Income tax expense/(benefit)	$	(10,734	)	$	6,874		$	433

(1)	The (gain)/loss on revaluation of deferred consideration 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.

Income Tax Payments

A summary of income taxes paid by jurisdiction for the years ended December 31, 2022, 2021 and 2020 is as follows:


	Years Ended December 31,
	2022		2021		2020
Federal	$	6,424	$	4,258	$	4,470
State and local		1,431		1,020		1,353
Foreign		4,645		3,178		4,308

	$	12,500	$	8,456	$	10,131

Deferred Tax Assets

A summary of the components of the Company’s deferred tax assets at December 31, 2022 and 2021 is as follows:


	2022			2021
Deferred tax assets:
Capital losses	$	17,541		$	16,601
Accrued expenses		6,030			4,993
Unrealized losses		3,821			614
NOLs—Foreign		1,609			1,934
Stock-based compensation		1,526			1,359
Goodwill and intangible assets		1,085			1,276
Operating lease liabilities		313			—
NOLs—U.S.		255			382
Foreign currency translation adjustment		173			—
Outside basis differences		122			122
Interest carryforwards		—			437
Other		341			376

Deferred tax assets		32,816			28,094

Deferred tax liabilities:
Fixed assets and prepaid assets		278			257
Foreign currency translation adjustment		—			181
Unremitted earnings—European subsidiaries		205			118
Right of use assets—operating leases		313			—

Deferred tax liabilities		796			556

Total deferred tax assets less deferred tax liabilities		32,020			27,538
Less: Valuation allowance		(21,484	)		(18,657	)

Deferred tax assets, net	$	10,536		$	8,881

Net Operating and Capital Losses – U.S.

The Company’s tax effected net operating losses (“NOLs”) at December 31, 2022 were $255, which expire in 2024. The net operating loss carryforwards have been reduced by the impact of annual limitations described in the Internal Revenue Code Section 382 that arose as a result of an ownership change.

The Company’s tax effected capital losses at December 31, 2022 were $17,541. These capital losses expire between the years 2023 and 2027.

Net Operating Losses – Europe

One of the Company’s European subsidiaries generated NOLs outside the U.S. These tax effected NOLs, all of which are carried forward indefinitely, were $1,609 at December 31, 2022.

Valuation Allowance

The Company’s valuation allowance has been established on its net capital losses, unrealized losses and outside basis differences, as it is

more-likely-than-not

that these deferred tax assets will not be realized.

During the year ended December 31, 2022, the Company released the valuation allowance on its European net operating losses of $

1,609

as it is

more-likely-than-not

that these deferred tax assets will be realized.

Uncertain Tax Positions

Tax

positions

are evaluated utilizing a

two-step

process. The Company first determines whether any of its tax positions are

more-likely-than-not

to be sustained upon examination, based solely on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

In connection with the ETFS Acquisition, the Company accrued a liability for uncertain tax positions and interest and penalties at the acquisition date. The Company also recorded an offsetting indemnification asset provided by ETFS Capital as part

of its agreement to indemnify the Company for any potential claims.

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


	Total			Unrecognized Tax Benefits			Interest and Penalties
Balance at January 1, 2021	$	27,016		$	21,850		$	5,166
Decrease—Lapse of statute of limitations (1)		(5,171	)		(3,559	)		(1,612	)
Increases		173			—			173
Foreign currency translation (2)		(93	)		(73	)		(20	)

Balance at December 31, 2021	$	21,925		$	18,218		$	3,707
Decrease—Settlements (1)		(13,052	)		(11,865	)		(1,187	)
Decrease—Lapse of statute of limitations (1)		(6,845	)		(4,825	)		(2,020	)
Increases		26			—			26
Foreign currency translation (2)		(701	)		(571	)		(130	)

Balance at December 31, 2022	$	1,353		$	957		$	396

(1)

In January

2022, an audit of ManJer’s tax returns (a Jersey-based subsidiary) for the years ended December 31, 2014, 2016, 2017 and 2018 were resolved in favor of ManJer. The settlement, as well as the reduction in unrecognized tax benefits from the lapse of the statute of limitations totaling $19,897 during the year ended December 31, 2022 was recorded as an income tax benefit along with an equal and offsetting amount recorded in other losses and gains, net, to recognize a reduction in the indemnification asset. During the year ended December 31, 2021, an income tax benefit of $5,171 was recorded upon the lapse of the statute of limitations with an equal and offsetting amount in other losses and gains, net.

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

The gross unrecognized tax benefits and interest and penalties totaling $1,353 and $21,925 at December 31, 2022 and 2021, respectively, are included in other

non-current

liabilities on the Consolidated Balance Sheets. It is reasonably possible that the remaining amount of unrecognized tax benefits will reduce to zero in the next 12 months upon lapsing of the statute of limitations. If recognized, these unrecognized tax benefits would impact the effective tax rate. The recognition of any unrecognized tax benefits would result in an equal and offsetting adjustment to the indemnification asset which would be recorded in income before taxes due to the indemnity for any potential claims.

Income Tax Examinations

The Company is subject to U.S. federal income tax as well as income tax of multiple state, local and certain foreign jurisdictions. As of December 31, 2022, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for the years before 2018.

ManJer’s tax returns (a Jersey-based subsidiary) were previously under review for the years ended December 31, 2014, 2016, 2017 and 2018. In January 2022, the audit was resolved in favor of ManJer. In addition, the Company’s tax returns were previously under review by the State of Michigan for the years ended 2017 through 2020. In August 2022, the audit was resolved in favor of the Company.

Undistributed Earnings of Foreign Subsidiaries

ASC

740-30

Income Taxes

provides guidance that US companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested. The Company repatriates earnings of its foreign subsidiaries and therefore has recognized a deferred tax liability of $205 and $118 at December 31, 2022 and 2021, respectively.