INCOME TAXES
The Company is treated as a partnership for income tax purposes and is therefore not subject to U.S. federal, state and local income taxes. The Company is subject to New York City unincorporated business tax attributable to the Company's operations apportioned to New York City.
The provision for (benefit from) income taxes consist of the following:
|
| | | | | | | | | | | |
| For the Years Ended December 31, |
| 2017 | | 2016 | | 2015 |
| (Amounts in thousands) |
Current tax provision | $ | 682 |
| | $ | 944 |
| | $ | 662 |
|
Deferred tax provision | (86 | ) | | (480 | ) | | (270 | ) |
Provision for Income Taxes | $ | 596 |
| | $ | 464 |
| | $ | 392 |
|
Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount on the Company’s consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years. The significant components of the Company's deferred tax assets and liabilities included on its consolidated balance sheet are as follows:
|
| | | | | | | |
| As of December 31, |
| 2017 | | 2016 |
| (Amounts in thousands) |
Deferred tax assets | | | |
Tax goodwill | $ | 557 |
| | $ | 605 |
|
New York City unincorporated business tax credit carryforward
| 701 |
| | 512 |
|
Unrealized losses | 337 |
| | 44 |
|
Stock-based compensation
| 173 |
| | 216 |
|
Other items | 158 |
| | 207 |
|
Total deferred tax assets | 1,926 |
| | 1,584 |
|
Deferred tax liabilities | | | |
Accrued fee income | 88 |
| | 147 |
|
Other items | 4 |
| | 55 |
|
Total deferred tax liabilities | 92 |
| | 202 |
|
Net deferred tax assets | $ | 1,834 |
| | $ | 1,382 |
|
The Company’s effective tax rate includes a rate benefit attributable to the fact that the Company and its subsidiaries operate as limited liability companies, which are not subject to federal or state income tax. A reconciliation of the federal statutory tax rate to the effective tax rates for the years ended December 31, 2017, 2016 and 2015 are as follow:
|
| | | | | | | | |
| For the Years Ended December 31, |
| 2017 | | 2016 | | 2015 |
Federal statutory rate | 34.0 | % | | 34.0 | % | | 34.0 | % |
Rate benefit from U.S. partnership operations | (34.0 | )% | | (34.0 | )% |
| (34.0 | )% |
Partnership unincorporated business tax | 3.1 | % | | 4.2 | % | | 1.7 | % |
Effective tax rate | 3.1 | % | | 4.2 | % | | 1.7 | % |
Interest expense and penalties related to income tax matters are recognized as a component of the provision for income taxes and were not significant during the years ended December 31, 2017, 2016 and 2015. As of and during the years ended December 31, 2017, 2016 and 2015, there were no uncertain tax positions taken that were not more likely than not to be sustained. The primary jurisdictions in which the Company operates in are the United States, New York, New York City, and California. The Company is no longer subject to tax examinations by taxing authorities for tax years prior to 2014.