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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income or loss before provision for income taxes consisted of the following (in thousands):


	Year Ended December 31,
	2023		2022		2021
US	$	61,356	$	331,009	$	390,607
Foreign	(241,620)		(20,020)		45,934
Total (loss) income before provision for income taxes	$	(180,264)	$	310,989	$	436,541

Components of Provision for Income Taxes

The provision for income tax consisted of the following (in thousands):


	Year Ended December 31,
	2023		2022		2021
Current expense (benefit):
Federal	$	59,558	$	59,105	$	33,582
State	17,677		11,803		5,787
Foreign	4,909		(893)		10,600
	82,144		70,015		49,969
Deferred expense (benefit):
Federal	(49,028)		8,142		49,512
State	(8,685)		6,290		5,904
Foreign	1,797		31,978		(20,045)
	(55,916)		46,410		35,371
Provision for income taxes	$	26,228	$	116,425	$	85,340

Schedule of Effective Tax Rates

The reconciliation of federal statutory income tax rate to our effective tax rate was as follows:


	Year Ended December 31,
	2023		2022		2021
Federal provision	21.0	%	21.0	%	21.0	%
State provision	(3.0)	%	5.0	%	2.3	%



Change in valuation allowance (1)	7.3	%	13.2	%	(2.3)	%
Goodwill impairment (2)	(28.3)	%	—	%	—	%
Taxable gain (deductible loss) in foreign jurisdiction (3)	2.9	%	(2.7)	%	—	%
Forfeit benefit due to merger/liquidations (4)	(14.7)	%	—	%	—	%
Other	0.3	%	0.9	%	(1.5)	%

Effective rate	(14.5)	%	37.4	%	19.5	%

________________________

(1)In 2023, includes reduction in valuation allowance due to the forfeit of tax benefits on merger or liquidation of foreign subsidiaries that maintained full valuation allowances on their deferred tax assets. In 2022, includes valuation allowance recorded on U.K. deferred tax assets.

(2)During the fourth quarter of 2023, the Company recorded a non-cash goodwill impairment charge of $238.2 million at the Cabot reporting unit. Refer to “Note 15: Goodwill and Identified Intangible Assets” for further details.

(3)In 2023, represents a taxable gain recognized in a foreign subsidiary. In 2022, represents deductible loss recognized in a foreign subsidiary that maintains a full valuation allowance on its deferred tax assets. Accordingly, the deductible loss increased the valuation allowance and did not result in any tax benefit during the year ended December 31, 2022.

(4)Represents the forfeit of tax benefits on merger or liquidation of foreign subsidiaries that maintained full valuation allowances on their deferred tax assets.

Components of Deferred Tax Assets and Liabilities

Significant components of the Company's deferred tax assets and liabilities were as follows (in thousands):


	December 31, 2023		December 31, 2022
Deferred tax assets:
Net operating losses	$	50,061	$	70,543
Operating lease liabilities	16,938		12,222
Accrued expenses	9,048		10,800
Difference in basis of bond and loan costs	4,155		—
Difference in basis of receivable portfolio	22,070		23,751
Stock-based compensation	3,916		4,960
Difference in basis of depreciable and amortizable assets	1,957		2,057
Other	5,303		2,396
Total deferred tax assets	113,448		126,729
Valuation allowance	(54,993)		(66,625)
Total deferred tax assets net of valuation allowance	58,455		60,104
Deferred tax liabilities:
Accrued expenses	(76)		(443)
Difference in basis of bond and loan costs	(445)		(1,003)
Difference in basis of receivable portfolio	(56,263)		(109,787)
Stock-based compensation	—		(970)
Right-of-use asset	(14,306)		(9,794)
Difference in basis of depreciable and amortizable assets	(8,596)		(16,807)
Prepaid expenses	(545)		(875)
Other	(3,087)		(10,206)
Total deferred tax liabilities	(83,318)		(149,885)
Net deferred tax liability(1)	$	(24,863)	$	(89,781)

________________________

(1)The Company operates in multiple jurisdictions. In accordance with authoritative guidance relating to income taxes, deferred taxes and liabilities are netted for each tax-paying component of the Company within a particular tax jurisdiction, and presented as a single amount in the statement of financial condition.

Unrecognized Tax Benefit

A reconciliation of the beginning and ending amounts of unrecognized tax benefit is as follows (in thousands):


	Amount




















Balance as of December 31, 2020	$	6,781
Decrease related to prior year tax positions	(2,034)
Decrease related to expiration of statute of limitations	(712)
Increase related to prior year tax positions	261
Increase related to current year tax positions	251
Balance as of December 31, 2021	4,547
Decrease related to prior year tax positions	(1,296)
Decrease related to settlements with taxing authorities	(713)
Decrease related to expiration of statute of limitations	(115)
Increase related to prior year tax positions	874
Increase related to current year tax positions	691
Balance as of December 31, 2022	3,988
Increase related to prior year tax positions	2,302
Increase related to current year tax positions	649
Decrease related to expiration of statute of limitations	(69)
Other	91
Balance as of December 31, 2023	$	6,961