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Income Taxes and Related Payments (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Components of the provision for income taxes

Components of the provision for income taxes consist of the following:

			For the Years Ended December 31,
			2019						2018						2017
Current:
Federal			$	13,609					$	18,247					$	21,960
State and local			6,315						3,993						2,663
Foreign			529						495						469
Total			20,453						22,735						25,092
Deferred:
Federal			22,310						22,218						396,502
State and local			(14,954)						2,645						(1,086)
Total			7,356						24,863						395,416
Income tax expense			$	27,809					$	47,598					$	420,508

Reconciliation of effective tax rate

The provision for income taxes differs from the amount of income tax computed by applying the applicable U.S. statutory federal income tax rate to income before provision for income taxes as follows:

			Years Ended December 31,
			2019						2018						2017
U.S. federal statutory rate			21.0		%				21.0		%				35.0		%
State and local taxes, net of federal tax effect			2.8						2.1						0.9
Non-deductible share-based compensation			—						—						0.5
Rate benefit from the flow through entity			(6.7)						(6.7)						(6.2)
Tax Reform - change in federal corporate tax rate			—						—						43.9
Change in state tax rate			(6.8)						—						—
Unrecognized tax benefits			0.6						—						—
Other			(0.6)						(0.6)						(0.5)
Effective tax rate			10.3		%				15.8		%				73.6		%

Schedule of DTA and TRA Payable

The change in the Company’s deferred tax assets related to the tax benefits described above and the change in corresponding amounts payable under the TRAs for the years ended December 31, 2019 and 2018 is summarized as follows:

			Deferred Tax Asset - Amortizable Basis						Amounts Payable Under Tax Receivable Agreements
December 31, 2017			$	410,690					$	385,413
2018 Follow-On Offering			7,687						6,534
2018 Holdings Common Unit Exchanges			16,199						13,770
Amortization			(29,851)						—
Payments under TRAs(1)			—						(36,111)
Change in estimate			(10)						(251)
December 31, 2018			$	404,715					$	369,355
2019 Holdings Common Unit Exchanges			13,424						11,410
Amortization			(31,872)						—
Payments under TRAs(1)			—						(24,998)
Change in estimate			21,873						19,557
December 31, 2019			$	408,140					$	375,324
(1) Interest payments of $78 thousand and $115 thousand were paid in addition to these TRA payments for the years ended December 31, 2019 and 2018, respectively.

Components of deferred tax assets

Net deferred tax assets comprise the following:

			As of December 31, 2019						As of December 31, 2018
Deferred tax assets:
Amortizable basis (1)			$	408,140					$	404,715
Other (2)			27,757						24,413
Total deferred tax assets			435,897						429,128
Less: valuation allowance (3)			—						—
Net deferred tax assets			$	435,897					$	429,128
(1) Represents the unamortized step-up of tax basis and other tax attributes from the merger and partnership unit sales and exchanges described above. These future tax benefits are subject to the TRA agreements.
(2) Represents the net deferred tax assets associated with the merger described above and other miscellaneous deferred tax assets. These future tax benefits are not subject to the TRA agreements.
(3) Artisan assessed whether the deferred tax assets would be realizable and determined based on its history of taxable income that the benefits would more likely than not be realized. Accordingly, no valuation allowance is required.

Schedule of Unrecognized Tax Benefits Roll Forward

The change in the Company’s gross unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017 is summarized as follows:

			For the Years Ended December 31,
			2019						2018						2017
Balance at beginning of year			$	—					$	—					$	—
Additions for tax positions of prior years			1,667						—						—
Reductions for tax positions of prior years			—						—						—
Tax positions related to the current year			—						—						—
Settlements with taxing authorities			—						—						—
Expirations of statute of limitations			—						—						—
Balance at End of Year			$	1,667					$	—					$	—

If recognized, $1.6 million of the benefits would favorably impact the effective tax rate in future periods. The total amount of unrecognized tax benefits is currently not expected to significantly increase or decrease within the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. Accrued interest on uncertain tax positions was $0.3 million as of December 31, 2019, and is excluded from the unrecognized tax benefits total above. The gross unrecognized tax benefit is recorded within accounts payable, accrued expenses, and other in the Company's Consolidated Statements of Financial Condition.

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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