XML 43 R26.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 9 Months Ended
--- | ---
Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | 20. Income Taxes Effective Income Tax Rate – Three and Nine Months Ended September 30, 2018 The Company’s estimated effective income tax rate for the three months ended September 30, 2018 of 19.9% resulted in income tax expense of $5,481. The Company’s tax rate differs from the federal statutory tax rate of 21% primarily due to the non-taxable gain on revaluation of deferred consideration and a lower tax rate on foreign earnings, partly offset by a valuation allowance on foreign net operating losses and state and local income taxes. The Company’s estimated effective income tax rate for the nine months ended September 30, 2018 of 24.3% resulted in income tax expense of $15,439. The Company’s tax rate differs from the federal statutory tax rate of 21% primarily due to a valuation allowance on foreign net operating losses, state and local income taxes and non-deductible acquisition-related costs, partly offset by the gain on revaluation of deferred consideration and a lower tax rate on foreign earnings. Effective Income Tax Rate – Three and Nine Months Ended September 30, 2017 The Company’s estimated effective income tax rate for the three months ended September 30, 2017 of 48.5% resulted in income tax expense of $7,520. The Company’s tax rate differs from the federal statutory tax rate of 35% primarily due to a valuation allowance on foreign net operating losses and state and local income taxes. The Company’s estimated effective income tax rate for the nine months ended September 30, 2017 of 48.7% resulted in income tax expense of $25,582. The Company’s tax rate differs from the federal statutory tax rate of 35% primarily due to a valuation allowance on foreign net operating losses, tax shortfalls associated with the vesting of stock-based compensation awards and state and local income taxes. Net Operating Losses – U.S. The Company’s pre-tax federal net operating losses for tax purposes (“NOLs”) at September 30, 2018 were $3,147, which expire in 2024. The net operating loss carryforwards have been reduced by the impact of annual limitations described in the Internal Revenue Code Section 382 that arose as a result of an ownership change. Net Operating Losses – International The Company’s European and Canadian subsidiaries generated NOLs outside the U.S. These tax effected NOLs were $5,747 at September 30, 2018. The Company established a full valuation allowance related to these NOLs as it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Deferred Tax Assets A summary of the components of the Company’s deferred tax assets at September 30, 2018 and December 31, 2017 are as follows:
|  | September 30, 2018 |  |  | December 31, 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
NOLs – Foreign |  | $ | 5,747 |  |  | $ | 3,841 |
Stock-based compensation |  |  | 2,206 |  |  |  | 1,474 |
Deferred rent liability |  |  | 1,195 |  |  |  | 1,257 |
NOLs – U.S. |  |  | 762 |  |  |  | 909 |
Accrued expenses |  |  | 1,611 |  |  |  | 526 |
Other |  |  | 207 |  |  |  | 488 |
Deferred tax assets |  |  | 11,728 |  |  |  | 8,495 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Unrealized gains |  |  | 1,666 |  |  |  | 1,718 |
Fixed assets |  |  | 1,495 |  |  |  | 1,498 |
Goodwill and intangible assets |  |  | 522 |  |  |  | 388 |
Prepaid assets |  |  | 85 |  |  |  | — |
Deferred tax liabilities |  |  | 3,768 |  |  |  | 3,604 |
Total deferred tax assets less deferred tax liabilities |  |  | 7,960 |  |  |  | 4,891 |
Less: valuation allowance |  |  | (5,747 | ) |  |  | (3,841 | )
Deferred tax assets, net |  | $ | 2,213 |  |  | $ | 1,050 |
Uncertain Tax Positions Tax positions are evaluated utilizing a two-step process. The Company first determines whether any of its tax positions are more-likely-than-not to be sustained upon examination, based solely on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. In connection with the ETFS Acquisition, the Company accrued a liability of £18,102 ($25,631) for uncertain tax positions and £3,415 ($4,835) for interest and penalties at the acquisition date. During the three months ended September 30, 2018, the liability for uncertain tax positions and interest penalties at the acquisition date was adjusted by £4,016 ($5,686) and £1,650 ($2,336), respectively. The table below sets forth the aggregate changes in the balance of gross unrecognized tax benefits:
|  | Total |  |  | Unrecognized Tax Benefits |  |  | Interest and Penalties |
Balance on January 1, 2018 |  | $ | — |  |  | $ | — |  |  | $ | — |
Accrued in connection with the ETFS Acquisition |  |  | 38,488 |  |  |  | 31,317 |  |  |  | 7,171 |
Increases |  |  | 227 |  |  |  | — |  |  |  | 227 |
Foreign currency translation(1) |  |  | (3,061 | ) |  |  | (2,491 | ) |  |  | (570 | )
Balance at September 30, 2018 |  | $ | 35,654 |  |  | $ | 28,826 |  |  | $ | 6,828 |
(1) | The gross unrecognized tax benefits were accrued in British pounds sterling.
The Company also recorded an offsetting indemnification asset provided by ETFS Capital as part of its agreement to indemnify the Company for any potential claims, for which an amount is being held in escrow. ETFS Capital has also agreed to provide additional collateral by maintaining a minimum working capital balance up to a stipulated amount. The gross unrecognized tax benefits and interest and penalties totaling $35,654 at September 30, 2018 are included in other non-current liabilities on the Consolidated Balance Sheet. It is expected that the amount of unrecognized tax benefits will change in the next 12 months, however, the Company does not expect the change to have a material impact on its consolidated financial statements. At September 30, 2018, there were $28,826 of unrecognized tax benefits that, if recognized, would impact the effective tax rate. The recognition of any unrecognized tax benefits would result in an equal and offsetting adjustment to the indemnification asset which would be recorded in income before taxes. Income Tax Examinations The Company is subject to U.S. federal income tax as well as income tax of multiple state, local and certain foreign jurisdictions. The tax return for the year ended December 31, 2016 of ManJer, the Company’s Jersey-based subsidiary, is currently under review by the relevant tax authority. The Company is indemnified by ETFS Capital for any potential exposure. The Company is not currently under audit in any other income tax jurisdictions. As of September 30, 2018, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for years before 2014.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration