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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes |
17. | INCOME TAXES
Lazard Ltd, through its subsidiaries, is subject to U.S. federal income taxes on all of its U.S. operating income, as well as on the portion of non-U.S. income attributable to its U.S. subsidiaries. In addition, Lazard Ltd, through its subsidiaries, is subject to state and local taxes on its income apportioned to various state and local jurisdictions. Outside the U.S., Lazard Group operates principally through subsidiary corporations that are subject to local income taxes in foreign jurisdictions. Lazard Group is also subject to Unincorporated Business Tax (“UBT”) attributable to its operations apportioned to New York City. The components of the Company’s provision for income taxes for the years ended December 31, 2022, 2021 and 2020, and a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rates for such years, are shown below.
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,081 |  |  | $ | (12,772 | ) |  | $ | 6,531 |
Foreign |  |  | 73,410 |  |  |  | 100,235 |  |  |  | 44,381 |
State and local |  |  | 6,165 |  |  |  | 3,197 |  |  |  | 1,389 |
Total current |  |  | 81,656 |  |  |  | 90,660 |  |  |  | 52,301 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 31,980 |  |  |  | 69,633 |  |  |  | 41,817 |
Foreign |  |  | 3,960 |  |  |  | 6,709 |  |  |  | 6,946 |
State and local |  |  | 6,769 |  |  |  | 14,301 |  |  |  | (1,615 | )
Total deferred |  |  | 42,709 |  |  |  | 90,643 |  |  |  | 47,148 |
Total |  | $ | 124,365 |  |  | $ | 181,303 |  |  | $ | 99,449 |
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
U.S. federal statutory income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
BEAT and GILTI tax |  |  | - |  |  |  | 0.4 |  |  |  | 0.9 |
Foreign source income not subject to U.S. income tax |  |  | (0.4 | ) |  |  | (2.6 | ) |  |  | (6.4 | )
Change in U.S. federal valuation allowance |  |  | 2.0 |  |  |  | 1.1 |  |  |  | 0.5 |
Share-based incentive compensation |  |  | 0.2 |  |  |  | 0.1 |  |  |  | 0.6 |
Foreign taxes |  |  | 4.0 |  |  |  | 6.1 |  |  |  | 3.2 |
Foreign tax credits |  |  | (3.7 | ) |  |  | (3.6 | ) |  |  | (2.1 | )
State and local taxes |  |  | 2.3 |  |  |  | 2.6 |  |  |  | 0.2 |
Loss (income) of non-controlling interests |  |  | (1.4 | ) |  |  | (0.3 | ) |  |  | 0.1 |
Uncertain tax positions |  |  | (0.1 | ) |  |  | (0.6 | ) |  |  | 0.7 |
Other |  |  | 0.2 |  |  |  | 0.8 |  |  |  | 1.1 |
Effective income tax rate |  |  | 24.1 | % |  |  | 25.0 | % |  |  | 19.8 | %
See Note 21 regarding “operating income (loss)” by geographic region. Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated statements of financial condition. These temporary differences result in taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are as follows:
|  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Basis adjustments (a) |  | $ | 131,353 |  |  | $ | 154,987 |
Compensation and benefits |  |  | 173,047 |  |  |  | 192,088 |
Net operating loss and tax credit carryforwards |  |  | 227,280 |  |  |  | 247,854 |
Depreciation and amortization |  |  | 1,268 |  |  |  | 1,138 |
Other |  |  | 64,887 |  |  |  | 50,547 |
Gross deferred tax assets |  |  | 597,835 |  |  |  | 646,614 |
Valuation allowance |  |  | (88,239 | ) |  |  | (88,953 | )
Deferred tax assets (net of valuation allowance) |  |  | 509,596 |  |  |  | 557,661 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 9,309 |  |  |  | 13,633 |
Compensation and benefits |  |  | 23,631 |  |  |  | 33,790 |
Goodwill |  |  | 43,448 |  |  |  | 39,451 |
Other |  |  | 29,471 |  |  |  | 37,306 |
Deferred tax liabilities |  |  | 105,859 |  |  |  | 124,180 |
Net deferred tax assets |  | $ | 403,737 |  |  | $ | 433,481 |
(a) | The basis adjustments recorded as of December 31, 2022 and 2021 are primarily the result of additional basis from acquisitions of interests, including the impact of the tax receivable agreement obligation.
The historical profitability of each tax-paying entity is an important factor in determining whether to record a valuation allowance and when to release any such allowance. Certain of our tax-paying entities have individually experienced losses on a cumulative three year basis or have tax attributes that may expire unused. In addition, some of our tax-paying entities have recorded a valuation allowance on substantially all of their deferred tax assets due to the combined effect of operating losses in certain subsidiaries of these entities as well as foreign taxes that together substantially offset any U.S. tax liability. Taking into account all available information, we cannot determine that it is more likely than not that deferred tax assets held by these entities will be realized. Consequently, we have recorded valuation allowances on $88,239 and $88,953 of deferred tax assets held by these entities as of December 31, 2022 and 2021, respectively. Changes in the deferred tax assets valuation allowance for the years ended December 31, 2022, 2021 and 2020 was as follows:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Beginning Balance |  | $ | 88,953 |  |  | $ | 82,210 |  |  | $ | 76,486 |
Charged (credited) to provision for income taxes |  |  | 5,220 |  |  |  | 8,742 |  |  |  | 4,598 |
Charged (credited) to other comprehensive income and other |  |  | (5,934 | ) |  |  | (1,999 | ) |  |  | 1,126 |
Ending Balance |  | $ | 88,239 |  |  | $ | 88,953 |  |  | $ | 82,210 |
The Company had net operating loss and tax credit carryforwards for which related deferred tax assets of $227,280 were recorded at December 31, 2022 primarily relating to:
| (i) | indefinite-lived net operating loss carryforwards (subject to various limitations) of approximately $48,000 in Australia, Germany, Hong Kong, Saudi Arabia, Singapore and the U.S.; and
| (ii) | certain carryforwards of approximately $154,000 in the U.S. Foreign Tax Credits of $5,600 begin expiring in 2024 and is fully offset by a valuation allowance.
With few exceptions, the Company is no longer subject to income tax examination by foreign tax authorities and by U.S. federal, state and local tax authorities for years prior to 2014. While the Company is under examination in various tax jurisdictions with respect to certain open years, the Company does not expect that the result of any final determination related to these examinations will have a material impact on its financial statements. Developments with respect to such examinations are monitored on an ongoing basis and adjustments to tax liabilities are made as appropriate. A reconciliation of the beginning to the ending amount of gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2022, 2021 and 2020 is as follows:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Balance, January 1 (excluding interest and penalties of $18,579, $18,882 and $18,376, respectively) |  | $ | 77,617 |  |  | $ | 80,954 |  |  | $ | 86,886 |
Increases in gross unrecognized tax benefits relating to tax positions taken during: |  |  |  |  |  |  |  |  |  |  |  |
Prior years |  |  | 341 |  |  |  | 273 |  |  |  | 2,454 |
Current year |  |  | 19,193 |  |  |  | 17,829 |  |  |  | 14,702 |
Decreases in gross unrecognized tax benefits relating to: |  |  |  |  |  |  |  |  |  |  |  |
Tax positions taken during prior years |  |  | (2,052 | ) |  |  | (5,774 | ) |  |  | (9,814 | )
Settlements with tax authorities |  |  | (43 | ) |  |  | (134 | ) |  |  | (904 | )
Lapse of the applicable statute of limitations |  |  | (17,355 | ) |  |  | (15,531 | ) |  |  | (12,370 | )
Balance, December 31 (excluding interest and penalties of $17,992, $18,579 and $18,882, respectively) |  | $ | 77,701 |  |  | $ | 77,617 |  |  | $ | 80,954 |
Additional information with respect to unrecognized tax benefits is as follows:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Unrecognized tax benefits at the end of the year that, if recognized, would favorably affect the effective tax rate (includes interest and penalties of $17,992, $18,579 and $18,882, respectively) |  | $ | 80,094 |  |  | $ | 81,046 |  |  | $ | 86,117 |
Unrecognized tax benefits that, if recognized, would not affect the effective tax rate |  | $ | 15,599 |  |  | $ | 15,150 |  |  | $ | 13,719 |
Interest and penalties recognized in current income tax expense (after giving effect to the reversal of interest and penalties of $6,344, $5,210 and $3,757, respectively) |  | $ | (587 | ) |  | $ | (303 | ) |  | $ | 506 |
The Company anticipates that it is reasonably possible that approximately $18,000 of unrecognized tax benefits, including interest and penalties recorded at December 31, 2022, may be recognized within 12 months as a result of the lapse of the statute of limitations in various tax jurisdictions.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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