Non-controlling Interest

9 Months Ended

Sep. 30, 2019

4. Non-controlling Interest

RE/MAX Holdings is the sole managing member of RMCO and operates and controls all of the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows:


	September 30, 2019			December 31, 2018
	Shares	Ownership %		Shares	Ownership %
Non-controlling interest ownership of common units in RMCO	12,559,600	41.32	%	12,559,600	41.43	%
RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO)	17,835,719	58.68	%	17,754,416	58.57	%
Total common units in RMCO	30,395,319	100.00	%	30,314,016	100.00	%

The weighted average ownership percentages for the applicable reporting periods are used to calculate the net income attributable to RE/MAX Holdings. A reconciliation of “Income before provision for income taxes” to “Net Income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except for percentages):


	Three Months Ended September 30,
	2019									2018
	RE/MAX Holdings, Inc.			Non-controlling interest			Total			RE/MAX Holdings, Inc.			Non-controlling interest			Total
Weighted average ownership percentage of RMCO^(a)		58.67	%		41.33	%		100.00	%		58.56	%		41.44	%		100.00	%
Income before provision for income taxes^(a)	$	12,152		$	8,565		$	20,717		$	11,096		$	7,865		$	18,961
Provision for income taxes^(b)(c)		(2,979)			(474)			(3,453)			(2,957)			(463)			(3,420)
Net income	$	9,173		$	8,091		$	17,264		$	8,139		$	7,402		$	15,541


	Nine Months Ended September 30,
	2019									2018
	RE/MAX Holdings, Inc.			Non-controlling interest			Total			RE/MAX Holdings, Inc.			Non-controlling interest			Total
Weighted average ownership percentage of RMCO^(a)		58.64	%		41.36	%		100.00	%		58.54	%		41.46	%		100.00	%
Income before provision for income taxes^(a)	$	29,438		$	20,763		$	50,201		$	27,916		$	19,812		$	47,728
Provision for income taxes^(b)(c)		(7,286)			(1,261)			(8,547)			(7,146)			(1,283)			(8,429)
Net income	$	22,152		$	19,502		$	41,654		$	20,770		$	18,529		$	39,299

(a)	The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between RE/MAX Holdings and the non-controlling interest due to certain relatively insignificant expenses recorded at RE/MAX Holdings.

(b)

The provision for income taxes attributable to RE/MAX Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the pass-through income from RMCO. It also includes RE/MAX Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions.

(c)

The provision for income taxes attributable to the non-controlling interest represents its share of taxes related primarily to tax liabilities in certain foreign jurisdictions directly incurred by RMCO or its subsidiaries. Because RMCO is a pass-through entity, there is no U.S. federal and state income tax provision recorded on the non-controlling interest.

Distributions and Other Payments to Non-controlling Unitholders

Under the terms of RMCO’s fourth amended and restated limited liability company operating agreement (the “RMCO, LLC Agreement”), RMCO makes cash distributions to non-controlling unitholders on a pro-rata basis. The distributions paid or payable to non-controlling unitholders are summarized as follows (in thousands):


	Nine Months Ended
	September 30,
	2019		2018
Tax and other distributions	$	3,547	$	3,723
Dividend distributions		7,913		7,536
Total distributions to non-controlling unitholders	$	11,460	$	11,259