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Income Taxes and Related Payments (Tables)

12 Months Ended

Dec. 31, 2021

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,
Current:			2021						2020						2019
Federal			$	53,131					$	24,116					$	13,609
State and local			14,990						8,174						6,315
Foreign			523						515						529
Total			68,644						32,805						20,453
Deferred:
Federal			32,655						27,110						22,310
State and local			5,727						880						(14,954)
Total			38,382						27,990						7,356
Income tax expense			$	107,026					$	60,795					$	27,809

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:

			For the Years Ended December 31,
			2021						2020						2019
U.S. federal statutory rate			21.0		%				21.0		%				21.0		%
State and local taxes, net of federal tax effect			3.5						3.1						2.8
Excess tax benefits on share-based compensation			(1.4)						(1.1)						(0.7)
Rate benefit from the flow through entity			(4.1)						(5.5)						(6.7)
Change in state tax rate			—						(1.1)						(6.8)
Unrecognized tax benefits			—						0.2						0.6
Other			0.4						(0.1)						0.1
Effective tax rate			19.4		%				16.5		%				10.3		%

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, 2021 and 2020 is summarized as follows:

			Deferred Tax Asset - Amortizable Basis						Amounts Payable Under Tax Receivable Agreements
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
2021 Follow-On Offering			16,362						13,908
2021 Holdings Common Unit Exchanges			36,069						30,659
Amortization			(39,483)						—
Payments under TRAs (1)			—						(31,250)
Change in estimate			(9)						(358)
December 31, 2021			$	459,893					$	425,427
(1) Interest payments of $42 thousand and $60 thousand were paid in addition to these TRA payments for the years ended December 31, 2021 and 2020, 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 for the year ended December 31, 2020.

Components of deferred tax assets

Net deferred tax assets comprise the following:

Deferred tax assets:			As of December 31, 2021						As of December 31, 2020
Amortizable basis (1)			$	459,893					$	446,954
Other (2)			38,009						35,107
Total deferred tax assets			497,902						482,061
Less: valuation allowance (3)			—						—
Net deferred tax assets			$	497,902					$	482,061
(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, 2021, 2020 and 2019 is summarized as follows:

			For the Years Ended December 31,
			2021						2020						2019
Balance at beginning of year			$	1,085					$	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					$	1,085					$	1,667

If recognized, $1.0 million and $0.7 million of the benefits recorded as of December 31, 2021 and 2020, 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 as of December 31, 2021 and 2020, 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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