Income Taxes

12 Months Ended

Dec. 31, 2023

Components of Income Tax Expense (Benefit), Continuing Operations [Abstract]

Income Taxes

NOTE 25 – Income Taxes

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2023		2022			2021
Current taxes:
Federal	$	127,771	$	159,383		$	167,258
State		39,361		49,956			39,911
Foreign		1,056		929			2,950
		168,188		210,268			210,119
Deferred taxes:
Federal		9,067		8,752			19,747
State		2,917		4,203			5,640
Foreign		3,984		(262	)		6,717
		15,968		12,693			32,104
Provision for income taxes	$	184,156	$	222,961		$	242,223

Reconciliation of the statutory federal income tax rate with our company’s effective income tax rate is as follows (in thousands):

	Year Ended December 31,
	2023			2022			2021
Statutory rate	$	148,405		$	185,874		$	224,087
State income taxes, net of federal income tax		34,012			42,813			37,169
Non-deductible business expenses		25,177			10,944			9,732
Change in valuation allowance		21,931			9,802			2,248
Foreign tax rate difference		(2,471	)		(2,846	)		125
Federal tax credits		(7,002	)		(2,793	)		(2,126	)
Excess tax benefit from stock-based compensation		(31,109	)		(19,418	)		(32,004	)
Other, net		(4,787	)		(1,415	)		2,992
	$	184,156		$	222,961		$	242,223

Tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and liabilities (in thousands):

	December 31,
	2023			2022
Deferred tax assets:
Lease liabilities	$	205,487		$	206,091
Deferred compensation		82,593			81,457
Receivable reserves		52,342			47,308
Unrealized loss on investments		51,549			62,318
Net operating loss carryforwards		45,879			28,997
Accrued expenses		15,457			25,833
Total deferred tax assets		453,307			452,004
Valuation allowance		(46,843	)		(24,779	)
		406,464			427,225
Deferred tax liabilities:
Lease right-of-use assets		(195,962	)		(199,085	)
Goodwill and other intangibles		(72,927	)		(61,225	)
Prepaid expenses		(6,966	)		(4,427	)
Depreciation		(3,620	)		(1,180	)
Other		(5,467	)		(2,101	)
		(284,942	)		(268,018	)
Net deferred tax asset	$	121,522		$	159,207

Our net deferred tax asset at December 31, 2023, includes net operating loss carryforwards of $134.0 million that expire between 2024 and 2043. Certain of our net operating loss carryforwards do not expire. A valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized. The valuation allowance was increased by $22.1 million. We believe the realization of the remaining net deferred tax asset of $121.5 million is more likely than not based on the ability to carry back certain tax attributes against prior year taxable income for tax years before 2023 and to carry forward net operating losses indefinitely after 2023, and expectations of future taxable income, which is supported by a history of cumulative income.

The current tax payable, included in accounts payable and accrued expenses, is $6.1 million and $9.1 million as of December 31, 2023 and 2022, respectively. The current tax receivable, included in other assets, is $38.9 million and $28.1 million as of December 31, 2023 and 2022, respectively.

As of December 31, 2023, we considered all undistributed earnings of non-U.S. subsidiaries to be permanently reinvested. Therefore, we have not provided for any U.S. deferred income taxes. Because the time or manner of repatriation is uncertain, we cannot determine the impact of local taxes, withholding taxes and foreign tax credits associated with the future repatriation of such earnings, and therefore cannot quantify the tax liability that would be payable in the event all such foreign earnings are repatriated.

Uncertain Tax Positions

As of December 31, 2023 and 2022, we had $5.4 million and $5.3 million, respectively, of gross unrecognized tax benefits, all of which, if recognized, would impact the effective tax rate. We recognize interest and penalties related to uncertain tax positions in provision for income taxes in the consolidated statements of operations. As of December 31, 2023 and 2022, we had accrued interest and penalties of $0.4 million and $0.3 million, respectively, before benefit of federal tax deduction, included in accounts payable and accrued expenses in our consolidated statements of financial condition. The amount of interest and penalties recognized in our consolidated statements of operations for the years ended December 31, 2023, 2022, and 2021, was not significant.

The following table summarizes the activity related to our company’s unrecognized tax benefits from January 1, 2021 to December 31, 2023 (in thousands):

	Year Ended December 31,
	2023			2022			2021
Beginning balance	$	5,271		$	4,924		$	3,962
Increase related to prior year tax positions		112			195			2,719
Decrease related to prior year tax positions		(63	)		(635	)		(119	)
Increase related to current year tax positions		1,083			978			745
Decrease related to settlements with taxing authorities		—			—			(2,370	)
Decrease related to lapsing of statute of limitations		(973	)		(191	)		(13	)
Ending balance	$	5,430		$	5,271		$	4,924

We file income tax returns with the U.S. federal jurisdiction, various states, and certain foreign jurisdictions. We are not subject to U.S. federal examination for taxable years before 2020. We are not subject to certain state and local, or non-U.S. income tax examinations for taxable years before 2015.

There is a reasonable possibility that the unrecognized tax benefits will change within the next 12 months as a result of the expiration of various statutes of limitations or for the resolution of U.S. federal and state examinations, but we do not expect this change to be material to the consolidated financial statements.