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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes 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. See Note 1 for information on Lazard’s Conversion to a U.S. C-Corporation on January 1, 2024.
The components of the Company’s provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021, 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,
202320222021
Current:
Federal$96 $2,081 $(12,772)
Foreign55,513 73,410 100,235 
State and local2,809 6,165 3,197 
Total current58,418 81,656 90,660 
Deferred:   
Federal(58,600)31,980 69,633 
Foreign(5,123)3,960 6,709 
State and local(17,345)6,769 14,301 
Total deferred(81,068)42,709 90,643 
Total$(22,650)$124,365 $181,303 
Year Ended December 31,
202320222021
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
BEAT and GILTI tax– – 0.4 
Foreign source income not subject to U.S. income tax
1.0 (0.4)(2.6)
Change in U.S. federal valuation allowance4.3 2.0 1.1 
Share-based incentive compensation(4.5)0.2 0.1 
Foreign taxes(20.9)4.0 6.1 
Foreign tax credits5.0 (3.7)(3.6)
State and local taxes19.2 2.3 2.6 
Income attributable to noncontrolling interests
5.7 (1.4)(0.3)
Uncertain tax positions(0.3)(0.1)(0.6)
Other(2.2)0.2 0.8 
Effective income tax rate28.3 %24.1 %25.0 %
See Note 23 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,
20232022
Deferred Tax Assets:
Basis adjustments (a)$96,534 $131,353 
Compensation and benefits199,989 173,047 
Net operating loss and tax credit carryforwards277,103 227,280 
Depreciation and amortization30,530 11,777 
Interest carryover - Section 163(j) limitation42,581 21,150 
Other41,969 31,056 
Gross deferred tax assets688,706 595,663 
Valuation allowance(99,600)(88,239)
Deferred tax assets (net of valuation allowance)589,106 507,424 
Deferred Tax Liabilities:  
Depreciation and amortization9,221 10,074 
Compensation and benefits22,129 23,631 
Goodwill46,686 43,448 
Other17,587 26,534 
Deferred tax liabilities95,623 103,687 
Net deferred tax assets$493,483 $403,737 
_____________________
(a)The basis adjustments recorded as of December 31, 2023 and 2022 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 $99,600 and $88,239 of deferred tax assets held by these entities as of December 31, 2023 and 2022, respectively.
Changes in the deferred tax assets valuation allowance for the years ended December 31, 2023, 2022 and 2021 was as follows:
Year Ended December 31,
202320222021
Beginning Balance$88,239 $88,953 $82,210 
Charged (credited) to provision for income taxes11,354 5,220 8,742 
Charged (credited) to other comprehensive income and other
7 (5,934)(1,999)
Ending Balance$99,600 $88,239 $88,953 
The Company had net operating loss and tax credit carryforwards for which related deferred tax assets of $277,103 were recorded at December 31, 2023 primarily relating to:
(i)indefinite-lived net operating loss carryforwards (subject to various limitations) of approximately $92,000 in Australia, Germany, Hong Kong, Saudi Arabia, Singapore and the U.S.; and
(ii)carryforwards of approximately $156,000 that expire in different periods, including U.S. foreign tax credits of $5,600 that begin to expire in 2024 and are 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 2017. 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, 2023, 2022 and 2021 is as follows:
Year Ended December 31,
202320222021
Balance, January 1 (excluding interest and penalties of $17,992, $18,579 and $18,882, respectively)
$77,701 $77,617 $80,954 
Increases in gross unrecognized tax benefits relating to tax positions taken during:
   
Prior years615 341 273 
Current year18,604 19,193 17,829 
Decreases in gross unrecognized tax benefits relating to:
   
Tax positions taken during prior years(836)(2,052)(5,774)
Settlements with tax authorities(243)(43)(134)
Lapse of the applicable statute of limitations(16,261)(17,355)(15,531)
Balance, December 31 (excluding interest and penalties of $18,501, $17,992 and $18,579, respectively)
$79,580 $77,701 $77,617 
Additional information with respect to unrecognized tax benefits is as follows:
Year Ended December 31,
202320222021
Unrecognized tax benefits at the end of the year that, if recognized, would favorably affect the effective tax rate (includes interest and penalties of $18,501, $17,992 and $18,579, respectively)
$80,346 $80,094 $81,046 
Unrecognized tax benefits that, if recognized, would not affect the effective tax rate
$17,735 $15,599 $15,150 
Interest and penalties recognized in current income tax expense (after giving effect to the reversal of interest and penalties of $5,528, $6,344 and $5,210, respectively)
$509 $(587)$(303)
The Company anticipates that it is reasonably possible that approximately $14,500 of unrecognized tax benefits, including interest and penalties recorded at December 31, 2023, may be recognized within 12 months as a result of the lapse of the statute of limitations in various tax jurisdictions.