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Income Taxes and Related Payments (Tables)

12 Months Ended

Dec. 31, 2020

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,
			2020						2019						2018
Current:
Federal			$	24,116					$	13,609					$	18,247
State and local			8,174						6,315						3,993
Foreign			515						529						495
Total			32,805						20,453						22,735
Deferred:
Federal			27,110						22,310						22,218
State and local			880						(14,954)						2,645
Total			27,990						7,356						24,863
Income tax expense			$	60,795					$	27,809					$	47,598

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,
			2020						2019						2018
U.S. federal statutory rate			21.0		%				21.0		%				21.0		%
State and local taxes, net of federal tax effect			3.1						2.8						2.1
Excess tax benefits on share-based compensation			(1.1)						(0.7)						(0.4)
Rate benefit from the flow through entity			(5.5)						(6.7)						(6.7)
Change in state tax rate			(1.1)						(6.8)						—
Unrecognized tax benefits			0.2						0.6						—
Other			(0.1)						0.1						(0.2)
Effective tax rate			16.5		%				10.3		%				15.8		%

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, 2020 and 2019 is summarized as follows:

			Deferred Tax Asset - Amortizable Basis						Amounts Payable Under Tax Receivable Agreements
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 (2)			21,873						19,557
December 31, 2019			$	408,140					$	375,324
2020 Follow-On Offering			21,424						18,211
2020 Holdings Common Unit Exchanges			48,474						41,203
Amortization			(34,686)						—
Payments under TRAs (1)			—						(26,943)
Change in estimate (2)			3,602						4,673
December 31, 2020			$	446,954					$	412,468
(1) Interest payments of $60 thousand and $78 thousand were paid in addition to these TRA payments for the years ended December 31, 2020 and 2019, respectively.
(2) Included in these totals are adjustments to the deferred tax assets for changes in the state deferred enacted tax rates of $3.7 million and $17.2 million for the years ended December 31, 2020 and 2019, respectively.

Components of deferred tax assets

Net deferred tax assets comprise the following:

			As of December 31, 2020						As of December 31, 2019
Deferred tax assets:
Amortizable basis (1)			$	446,954					$	408,140
Other (2)			35,107						27,757
Total deferred tax assets			482,061						435,897
Less: valuation allowance (3)			—						—
Net deferred tax assets			$	482,061					$	435,897
(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, 2020, 2019 and 2018 is summarized as follows:

			For the Years Ended December 31,
			2020						2019						2018
Balance at beginning of year			$	1,667					$	—					$	—
Additions for tax positions of prior years			1,187						1,667						—
Reductions for tax positions of prior years			(613)						—						—
Tax positions related to the current year			216						—						—
Settlements with taxing authorities			(1,372)						—						—
Expirations of statute of limitations			—						—						—
Balance at end of year			$	1,085					$	1,667					$	—

If recognized, $0.7 million and $1.6 million of the benefits recorded as of December 31, 2020 and 2019, respectively, 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 $0.2 million and $0.3 million as of December 31, 2020 and 2019, respectively, 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 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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