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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes 10. Income Taxes
The income (loss) before provision for income taxes consists of the following:
Year Ended December 31,
2024
2023
2022
(Dollars in millions)
U.S. domestic income (loss)
$1,163.5
$(857.6)
$1,402.9
Foreign income
230.2
256.7
169.6
Total income (loss) before provision for income taxes
$1,393.7
$(600.9)
$1,572.5
The provision for income taxes consists of the following:
 
Year Ended December 31,
 
2024
2023
2022
 
(Dollars in millions)
Current
Federal income tax
$132.2
$186.0
$263.6
State and local income tax
27.0
29.1
30.4
Foreign income tax
55.5
46.2
55.6
Total current
214.7
261.3
349.6
Deferred
Federal income tax
102.5
(333.4)
(25.1)
State and local income tax
(0.8)
(26.0)
(3.3)
Foreign income tax
(13.8)
(6.1)
(33.4)
Total deferred
87.9
(365.5)
(61.8)
Total provision (benefit) for income taxes
$302.6
$(104.2)
$287.8
The following table summarizes the effective income tax rate:
Year Ended December 31,
2024
2023
2022
(Dollars in millions)
Income (loss) before provision for income taxes
$1,393.7
$(600.9)
$1,572.5
Provision (benefit) for income taxes
$302.6
$(104.2)
$287.8
Effective income tax rate
21.71%
17.34%
18.30%
The effective tax rate is impacted by a variety of factors, including, but not limited to, changes in the sources of
income or loss during the period and whether such income or loss is taxable to the Company and its subsidiaries. The following
table reconciles the effective income tax rate to the U.S. federal statutory tax rate:
 
Year Ended December 31,
 
2024
2023
2022
Statutory U.S. federal income tax rate
21.00%
21.00%
21.00%
State and local income taxes
1.80%
1.55%
0.83%
Foreign income taxes(1)
(0.42)%
(1.19)%
(1.75)%
Income passed through to common unitholders and non-controlling interest
holders(2)
(0.84)%
3.17%
(0.67)%
Equity-based compensation(3)
0.20%
(2.76)%
(0.67)%
Valuation allowance(4)
—%
(1.02)%
0.30%
Unrecognized tax benefits
(0.13)%
(1.13)%
0.01%
Other adjustments(4)
0.10%
(2.28)%
(0.75)%
Effective income tax rate
21.71%
17.34%
18.30%
(1)All periods are net of foreign tax credits. 2022 includes a tax benefit due to restructuring the ownership of its foreign Global Investment Solutions
business and the impact of amending the Company’s 2020 tax return to claim a foreign tax credit rather than the original filing position claiming a
foreign tax deduction.
(2)Includes income that is not taxable to the Company and its subsidiaries.
(3)Includes the net impact of nondeductible officer compensation expense offset by tax benefits from windfall deductions in each year.
(4)In 2024, the nondeductible officer compensation expense increased the effective tax rate by 1.56% and the tax benefit from windfall deductions
decreased the effective tax rate by 1.37%. 2023 includes updates to the current and/or deferred tax balances related to the filing of the Company’s
2022 tax returns. The gross impact of these changes in estimates to Valuation allowance and Other adjustments was 1.36% and (0.86)%, respectively. 
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. The following table summarizes the tax effects of the
temporary differences:
 
As of December 31,
 
2024
2023
 
(Dollars in millions)
Deferred tax assets
Federal foreign tax credit carryforward
$47.9
$46.8
State net operating loss carryforwards
5.1
5.7
Tax basis goodwill and intangibles
218.3
240.3
Depreciation and amortization
76.3
61.7
Deferred restricted common unit compensation
83.1
36.5
Lease liabilities
114.7
116.1
Accrued compensation
1,045.8
926.2
Other
106.6
109.8
Deferred tax assets before valuation allowance
1,697.8
1,543.1
Valuation allowance
(62.7)
(62.8)
Total deferred tax assets
$1,635.1
$1,480.3
Deferred tax liabilities(1)
Unrealized appreciation on investments
$1,517.3
$1,333.8
Lease right-of-use assets
87.4
87.7
Basis difference in investments
100.2
48.8
Other
39.6
38.8
Total deferred tax liabilities
$1,744.5
$1,509.1
Net deferred tax assets (liabilities)
$(109.4)
$(28.8)
(1)As of December 31, 2024 and 2023, $1,607.5 million and $1,463.8 million of deferred tax assets were offset and presented as a single deferred tax
liability amount on the Company’s consolidated balance sheet as these deferred tax assets and liabilities relate to the same jurisdiction.
The Company had $27.6 million and $16.5 million in deferred tax assets as of December 31, 2024 and 2023,
respectively, which are offset with deferred tax liabilities where those assets and liabilities relate to the same tax jurisdiction. In
both years, the deferred tax assets resulted primarily from the carryforward of federal and state tax attributes, partially offset by
a valuation allowance, and temporary differences between the financial statement and tax bases of assets and liabilities at the
Company’s foreign sub-advisor entities. The realization of the deferred tax assets is dependent on the Company’s future taxable
income before deductions related to the establishment of its deferred tax assets. The deferred tax asset balance comprises a
portion that would be realized in connection with future ordinary income and a portion that would be realized in connection
with future capital gains.
The Company evaluated various sources of evidence in determining the ultimate realizability of its deferred tax assets
including the character and timing of projected future taxable income and the Company’s ability to claim a foreign tax credit
(“FTC”). The Company continues to maintain a valuation allowance of $2.2 million on certain state net operating losses for a
corporate subsidiary with entity level state net operating losses that cannot be utilized by other group members. In addition, the
Company continues to maintain a valuation allowance of $47.8 million on certain FTC carryforwards generated in 2020 and
forward that are not expected to be realized due to federal limitations on its utilization. As of December 31, 2024 and 2023, the
Company established a total valuation allowance of $62.7 million and $62.8 million, respectively, with the net decrease
primarily due to a release of the valuation allowance on tax attribute carryforwards of a foreign subsidiary liquidated in 2024
offset by a net increase in the FTC carryforward and related deferred tax assets. For all other deferred tax assets, the Company
has concluded it is more likely than not that they will be realized and that a valuation allowance is not needed as of
December 31, 2024.
The Company has deferred tax liabilities of $137.0 million and $45.3 million as of December 31, 2024 and 2023,
respectively, which are offset with deferred tax assets where those assets and liabilities relate to the same tax jurisdiction. These
deferred tax liabilities primarily resulted from temporary differences between the financial statement and tax bases of accrued
performance allocations. These deferred tax liabilities are net of related compensation and offset by step-up in tax basis
resulting from the Conversion and future amortization of tax basis intangible assets generated from exchanges covered by the
Tax Receivable Agreement (see Note 2, Summary of Significant Accounting Policies).
As of December 31, 2024, the Company has cumulative state pre-tax net operating loss carryforwards of
approximately $63.6 million ($5.1 million tax-effected), which will be available to offset future taxable income. If unused, a
portion of the state carryforwards will begin to expire in 2025, which is considered in the valuation allowance evaluation
referenced above. In addition, the Company has a FTC carryforward of $47.9 million, which relates to taxes paid in foreign
jurisdictions. If unused, a portion will expire in 2030 and years forward, which is also considered in the valuation allowance
evaluation referenced above.
In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign
tax regulators. With a few exceptions, as of December 31, 2024, the Company’s U.S. federal income tax returns for the years
2021 through 2023 are open under the normal three-year statute of limitations and therefore subject to examination. State and
local tax returns are generally subject to audit from 2019 to 2023. Foreign tax returns are generally subject to audit from 2011
to 2023. Certain of the Company’s affiliates are currently under audit by federal, state and foreign tax authorities. The Company
does not believe that the outcome of the audits will require it to record material reserves for uncertain tax positions or that the
outcome will have a material impact on the consolidated financial statements.
Under U.S. GAAP for income taxes, the amount of tax benefit to be recognized is the amount of benefit that is “more
likely than not” to be sustained upon examination. The Company has recorded unrecognized tax benefits of $38.0 million and
$42.3 million as of December 31, 2024 and 2023, respectively, which is reflected in accounts payable, accrued expenses and
other liabilities in the accompanying consolidated balance sheets. These balances include $16.6 million and $17.8 million
related to interest and penalties associated with uncertain tax positions as of December 31, 2024 and 2023, respectively. During
the years ended December 31, 2024, 2023 and 2022, the Company accrued penalties and interest expense, net of settlements,
related to unrecognized tax benefits of $(0.8) million, $4.8 million, and $4.2 million, respectively. If recognized, $27.0 million
of uncertain tax positions would be recorded as a reduction in the provision for income taxes.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of penalties and interest,
is as follows:
 
As of December 31,
 
2024
2023
2022
 
(Dollars in millions)
Balance at January 1
$24.5
$26.2
$20.6
Additions based on tax positions related to current year
1.3
1.5
2.4
Additions for tax positions of prior years
—
1.6
5.3
Reductions for tax position of prior years
(1.2)
(0.2)
(1.6)
Reductions due to lapse of statute of limitations
(0.4)
(4.6)
(0.5)
Reductions due to settlements
(2.9)
—
—
Balance at December 31
$21.3
$24.5
$26.2
The Company does not believe that it has any tax positions for which it is reasonably possible that the total amounts of
unrecognized tax benefits will significantly increase or decrease within the next twelve months.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law. The IRA enacted a 15%
CAMT on the “adjusted financial statement income” of certain large corporations, which became effective on January 1, 2023.
The Company does not expect the IRA to have a material impact to its provision for income taxes given that any current year
payments that would be made under CAMT would be permitted to be carried forward and used as credits in future years
resulting in a deferred tax benefit. The Company will continue to monitor as additional guidance is released by U.S. Department
of the Treasury, the IRS, and other standard-setting bodies.
On December 27, 2023, the State of New York issued final regulations that implemented comprehensive franchise tax
reform for corporations, banks, and insurance companies. This did not have a material impact to the Company’s consolidated
financial statements. The Company will continue to monitor as additional guidance is released by the State of New York.
In October 2021, the OECD introduced a 15% global minimum tax under the Pillar Two GloBE model rules. There are a
number of key provisions under the rules that became effective in 2024 and others that will be phased in during 2025. Several
OECD member countries have enacted the tax legislation based on certain elements of these rules that became effective on
January 1, 2024, and additional countries have drafted or announced an intent to implement legislation. While Pillar Two did
not have a material impact to the Company’s provision for income taxes for 2024, the rules remain subject to significant
negotiation and potential change, and the timing and ultimate impact of any such changes on our tax obligations are uncertain.
The Company will continue to monitor as additional countries enact legislation, new parts of the regime come into force or
additional guidance is released by the OECD and other standard-setting bodies.