Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

15. Income Taxes

The Income Before Provision for Taxes consists of the following:

	Year Ended December 31,
	2023		2022		2021
Income Before Provision (Benefit) for Taxes
U.S. Domestic Income	$	2,577,184	$	3,023,588	$	13,275,132
Foreign Income		380,530		438,201		284,264
	$	2,957,714	$	3,461,789	$	13,559,396

The Provision for Taxes consists of the following:

	Year Ended December 31,
	2023			2022			2021
Current
Federal Income Tax	$	362,144		$	503,075		$	507,648
Foreign Income Tax		112,861			75,859			55,376
State and Local Income Tax		186,851			255,421			156,735
		661,856			834,355			719,759
Deferred
Federal Income Tax		(94,732	)		(312,961	)		373,223
Foreign Income Tax		(7,020	)		(3,048	)		(2,654	)
State and Local Income Tax		(46,643	)		(45,466	)		94,073
		(148,395	)		(361,475	)		464,642
Provision for Taxes	$	513,461		$	472,880		$	1,184,401

The following table summarizes Blackstone’s tax position:

	Year Ended December 31,
	2023			2022			2021
Income Before Provision for Taxes	$	2,957,714		$	3,461,789		$	13,559,396
Provision for Taxes	$	513,461		$	472,880		$	1,184,401
Effective Income Tax Rate		17.4	%		13.7	%		8.7	%

The following table reconciles the effective income tax rate to the U.S. federal statutory tax rate:

										2023			2022
	Year Ended December 31,									vs.			vs.
	2023			2022			2021			2022			2021
Statutory U.S. Federal Income Tax Rate		21.0	%		21.0	%		21.0	%		—			—
Income Passed Through to Non-Controlling Interest Holders		-8.2	%		-8.1	%		-10.2	%		-0.1	%		2.1	%
State and Local Income Taxes		4.3	%		6.0	%		2.1	%		-1.7	%		3.9	%
Change in Valuation Allowance		—			—			-4.1	%		—			4.1	%
Basis Adjustment (a)		—			-4.6	%		—			4.6	%		-4.6	%
Other		0.3	%		-0.6	%		-0.1	%		0.9	%		-0.5	%
Effective Income Tax Rate		17.4	%		13.7	%		8.7	%		3.7	%		5.0	%

(a) Represents the impact of the out-of-period adjustment made during the year ended December 31, 2022 to revise the book investment basis used to calculate deferred tax assets and the deferred tax provision.

Deferred income taxes reflect the net tax effects of temporary differences that may exist between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using enacted tax rates in effect for the year in which the differences are expected to reverse. A summary of the tax effects of the temporary differences is as follows:

	December 31,
	2023		2022
Deferred Tax Assets
Investment Basis Differences/Net Unrealized Gains and Losses	$	2,210,974	$	2,031,002
Other		120,420		31,720
Total Deferred Tax Assets		2,331,394		2,062,722
Deferred Tax Liabilities
Investment Basis Differences/Net Unrealized Gains and Losses		18,333		15,409
Other		2,163		31,498
Total Deferred Tax Liabilities		20,496		46,907
Net Deferred Tax Assets	$	2,310,898	$	2,015,815

The net increase in the deferred tax asset for the year ended December 31, 2023, compared to the year ended December 31, 2022, is primarily due to recognition of additional tax basis in certain assets and recording corresponding deferred tax benefits related to quarterly exchanges of Blackstone Holdings Partnership units for common shares of Blackstone Inc. Realization of deferred tax assets depends on the expectation and character of future taxable income. In addition, Blackstone has no significant net operating losses carryforward at December 31, 2023.

In evaluating the ability to realize deferred tax assets, Blackstone among other things, considers projections of taxable income (including character of such income), beginning with historic results and incorporating assumptions of the amount of future pretax operating income. These assumptions about future taxable income require significant judgment and are consistent with the plans and estimates that Blackstone uses to manage its business. To the extent any portion of the deferred tax assets are not considered to be more likely than not to be realized, valuation allowances are recorded.

Currently, Blackstone does not believe it meets the indefinite reversal criteria that would preclude Blackstone from recognizing a deferred tax liability with respect to its foreign subsidiaries. Therefore, if applicable Blackstone recorded a deferred tax liability for any outside basis difference of an investment in a foreign subsidiary.

Blackstone files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, Blackstone is subject to examination by federal and certain state, local and foreign tax authorities. As of December 31, 2023, the most material jurisdictions where Blackstone entities are under active examination are New York State and City. The following are the major filing jurisdictions and their respective earliest open period subject to examination:

Jurisdiction	Year
Federal		2020
New York City		2009
New York State		2016
United Kingdom		2011

Blackstone’s unrecognized tax benefits, excluding related interest and penalties, were:

	December 31,
	2023			2022		2021
Unrecognized Tax Benefits — January 1	$	153,624		$	47,501	$	32,933
Additions Based on Tax Positions Related to Current Year		19,807			—		—
Reductions for Tax Positions of Current Year		(19,737	)		—		—
Additions for Tax Positions of Prior Years		57,081			106,059		14,557
Exchange Rate Fluctuations		3			64		11
Unrecognized Tax Benefits — December 31	$	210,778		$	153,624	$	47,501

If recognized, the above tax benefits would reduce the annual effective rate. Blackstone believes the liability established for unrecognized tax benefits is adequate in relation to the potential for additional assessments. It is reasonably possible that significant changes in the balance of unrecognized tax benefits may occur during the twelve months subsequent to December 31, 2023; however, it is not possible to estimate the expected change to the total unrecognized tax benefits and its impact on Blackstone’s effective tax rate during the twelve months subsequent to December 31, 2023.

The unrecognized tax benefits are recorded in Accounts Payable, Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition.

During the years ended December 31, 2023, 2022 and 2021, Blackstone accrued no penalties and accrued interest expense related to unrecognized tax benefits of $22.8 million, $32.6 million and $1.5 million, respectively.

Other Income — Change in Tax Receivable Agreement Liability

In 2023 and 2022, the $(27.2) million and $22.3 million, respectively, Change in Tax Receivable Agreement Liability was primarily attributable to a change in our state tax apportionment.