Income Taxes

9 Months Ended

Sep. 30, 2023

Income Taxes [Abstract]

Income Taxes

18. Income Taxes

The Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary. As of September 30, 2023, the Company has concluded that its deferred tax assets are realizable on a more-likely-than-not basis with the with the exception of investments that are expected to generate a capital loss when realized and certain state net operating losses.

For the three months ended September 30, 2023, the Company recorded an income tax provision of $1,516,000 on pre-tax book income of $4,273,000. For the nine months ended September 30, 2023, the Company recorded an income tax provision of $3,621,000 on pre-tax book income of $12,321,000. The effective tax rate for the three and nine months ended September 30, 2023 was 35% and 29% respectively. The effective tax rate differs from the federal statutory rate of 21% primarily related to certain permanent tax differences and state and local taxes including the impact of finalizing the prior year tax filings.

For the three months ended September 30, 2022, the Company recorded an income tax provision of $473,000 on pre-tax book income of $1,440,000. For the nine months ended September 30, 2022, the Company recorded an income tax benefit of $836,000 on pre-tax book loss of $451,000. The effective tax rate for the three and nine months ended September 30, 2022 was 33% and 185%, respectively. The effective tax rate differs from the federal statutory rate of 21% primarily related to the benefit from the reversal of the uncertain tax position related to the 2018 amended tax return due to the expiration of the statute of limitations and certain permanent tax differences and state and local taxes.

As of both September 30, 2023 and December 31, 2022, the Company recorded an uncertain tax position of $1,596,000 related to various tax matters, which is included in the line item “Taxes payable” in the statements of financial condition.