Income Taxes

3 Months Ended

Mar. 31, 2024

Income Taxes [Abstract]

Income Taxes

21. Income Taxes

Effective Income Tax Rate – Three months ended March 31, 2024 and 2023

The Company’s effective income tax rate during the three months ended March 31, 2024 was 20.5%, resulting in income tax expense of $5,701. The effective income tax rate differs from the federal statutory tax rate of 21% primarily due to the decrease in the deferred tax asset valuation allowance on losses recognized on the Company’s financial instruments owned, tax windfalls associated with the vesting of stock-based compensation awards and a lower tax rate on foreign earnings. These items were partly offset by state and local income taxes.

The Company’s effective income tax rate during the three months ended March 31, 2023 was 7.9% resulting in income tax expense of $1,383. The effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a non-taxable gain on revaluation of deferred consideration and a $1,353 reduction in unrecognized tax benefits (including interest and penalties). These items were partly offset by a non-deductible loss on extinguishment of our convertible notes and an increase in the deferred tax asset valuation allowance on losses recognized on the Company’s investments.

Deferred Tax Assets

A summary of the components of the Company’s deferred tax assets at March 31, 2024 and December 31, 2023 is as follows:

	March 31, 2024		December 31, 2023
Deferred tax assets:
Capital losses	$	22,349	$	22,489
Accrued expenses		1,468		6,000
NOLs—Foreign		1,422		1,502
Stock-based compensation		884		2,468
Goodwill and intangible assets		848		895
Interest carryforwards		676		—
Foreign currency translation adjustment		241		146
Operating lease liabilities		38		96
NOLs—U.S.		—		127
Unrealized losses		—		335
Other		434		401
Total deferred tax assets		28,360		34,459

	March 31, 2024			December 31, 2023
Deferred tax liabilities:
Unrealized gains		158			—
Fixed assets and prepaid assets		155			296
Unremitted earnings—European subsidiaries		183			186
Right of use assets—operating leases		38			96
Total deferred tax liabilities:		534			578
Total deferred tax assets less deferred tax liabilities		27,826			33,881
Less: Valuation allowance		(22,349	)		(22,824	)
Deferred tax assets, net	$	5,477		$	11,057

Capital Losses – U.S.

The Company’s tax effected capital losses at March 31, 2024 were $22,349. These capital losses expire between the years 2024 and 2029.

Net Operating Losses – Europe

One of the Company’s European subsidiaries generated net operating losses (“NOLs”) outside the U.S. These tax effected NOLs, all of which are carried forward indefinitely, were $1,422 at March 31, 2024.

Valuation Allowance

The Company’s valuation allowance has been established on its net capital losses, as it is more-likely-than-not that these deferred tax assets will not be realized.

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 March 31, 2024, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for the years before 2019.

Undistributed Earnings of Foreign Subsidiaries

ASC 740-30 Income Taxes provides guidance that U.S. 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 $183 and $186 at March 31, 2024 and December 31, 2023, respectively.