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Income Taxes | 9 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 21. Income Taxes Effective Income Tax Rate – Three and Nine Months Ended September 30, 2019 The Company’s effective income tax rate during the three months ended September 30, 2019 of 51.9% resulted in income tax expense of $4,483. The Company’s effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a valuation allowance on foreign net operating losses, a non-deductible loss on revaluation of deferred consideration, non-deductible executive compensation and state and local income taxes, partly offset by a lower tax rate on foreign earnings. The Company’s effective income tax rate during the nine months ended September 30, 2019 of 31.2% resulted in income tax expense of $7,021. The Company’s effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a valuation allowance on foreign net operating losses, a non-deductible loss on revaluation of deferred consideration, state and local income taxes and tax shortfalls associated with the vesting and exercise of stock-based compensation awards, partly offset by a $4,309 reduction in unrecognized tax benefits and a lower tax rate on foreign earnings. Effective Income Tax Rate – Three and Nine Months Ended September 30, 2018 The Company’s 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 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. Deferred Tax Assets A summary of the components of the Company’s deferred tax assets at September 30, 2019 and December 31, 2018 are as follows:
|  | September 30, 2019 |  |  | December 31, 2018 |
Deferred tax assets: |  |  |  |
NOLs – International |  | $ | 8,776 |  |  | $ | 6,605 |
Accrued expenses |  |  | 2,729 |  |  |  | 2,699 |
Goodwill and intangible assets |  |  | 1,718 |  |  |  | 1,841 |
Stock-based compensation |  |  | 1,399 |  |  |  | 2,673 |
Net lease liability |  |  | 1,153 |  |  |  | 1,184 |
Capital losses |  |  | 803 |  |  |  | 794 |
NOLs – U.S. |  |  | 642 |  |  |  | 762 |
Other |  |  | 242 |  |  |  | 40 |
Deferred tax assets |  |  | 17,462 |  |  |  | 16,598 |
Deferred tax liabilities: |  |  |  |
Fixed assets and prepaid assets |  |  | 1,451 |  |  |  | 1,433 |
Unrealized gains |  |  | 777 |  |  |  | 724 |
Deferred tax liabilities |  |  | 2,228 |  |  |  | 2,157 |
Total deferred tax assets less deferred tax liabilities |  |  | 15,234 |  |  |  | 14,441 |
Less: valuation allowance |  |  | (9,579 | ) |  |  | (7,399 | )
Deferred tax assets, net |  | $ | 5,655 |  |  | $ | 7,042 |
Net Operating Losses – U.S . The Company’s tax effected federal net operating losses (“NOLs”) at September 30, 2019 were $642, 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. The Company’s tax effected capital losses at September 30, 2019 w ere $803. A full valuation allowance was established as it is more-likely-than-not that the deferred tax assets will not be realized. Net Operating Losses – International Certain of the Company’s European subsidiaries and its Canadian subsidiary generated NOLs outside the U.S. These tax effected NOLs were $8,776 and $6,605 at September 30, 2019 and December 31, 2018, respectively. The Company established a full valuation allowance related to these NOLs as it is more-likely-than-not that the deferred tax assets will not be realized. Approximately $4,575 of these NOLs at September 30, 2019 expire between 2036 and 2039. The remainder is carried forward indefinitely. 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 for uncertain tax positions and interest and penalties at the acquisition date. The table below sets forth the aggregate changes in the balance of these gross unrecognized tax benefits during the three and nine months ended September 30, 2019:
|  | Total |  |  | Unrecognized Tax Benefits |  |  | Interest and Penalties |
Balance on January 1, 2019 |  | $ | 34,876 |  |  | $ | 28,101 |  |  | $ | 6,775 |
Decrease—Lapse of statute of limitations |  |  | (4,309 | ) |  |  | (2,999 | ) |  |  | (1,310 | )
Increases |  |  | 101 |  |  |  | — |  |  |  | 101 |
Foreign currency translation (1) |  |  | 925 |  |  |  | 745 |  |  |  | 180 |
Balance at March 31, 2019 |  | $ | 31,593 |  |  | $ | 25,847 |  |  | $ | 5,746 |
Increases |  |  | 101 |  |  |  | — |  |  |  | 101 |
Foreign currency translation (1) |  |  | (817 | ) |  |  | (668 | ) |  |  | (149 | )
Balance at June 30, 2019 |  | $ | 30,877 |  |  | $ | 25,179 |  |  | $ | 5,698 |
Increases |  |  | 102 |  |  |  | — |  |  |  | 102 |
Foreign currency translation (1) |  |  | (994 | ) |  |  | (810 | ) |  |  | (184 | )
Balance at September 30, 2019 |  | $ | 29,985 |  |  | $ | 24,369 |  |  | $ | 5,616 |
(1) | The gross unrecognized tax benefits were accrued in British pounds.
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 decrease resulting from the lapsing of the statute of limitations of $4,309, was recorded as an income tax benefit and an equal and offsetting amount to reduce the indemnification asset was recorded in other gains and losses, net, during the nine months ended September 30, 2019. The gross unrecognized tax benefits and interest and penalties totaling $29,985 and $34,876 at September 30, 2019 and December 31, 2018, respectively, 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, 2019, there were $24,369 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 due to the indemnity for any potential claims. 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 Company’s federal tax return and ManJer’s tax return (a Jersey-based subsidiary) for the year ended December 31, 2016 are currently under review by the relevant tax authorities. The Company is indemnified by ETFS Capital for any potential exposure associated with ManJer’s tax return under audit. The Company is not currently under audit in any other income tax jurisdictions. As of September 30, 2019, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for years before 2015. Undistributed Earnings of Foreign Subsidiaries The Company recognizes deferred tax liabilities for withholding taxes that may become payable, where applicable, upon the distribution of earnings and profits from foreign subsidiaries unless considered permanent in duration. As of September 30, 2019, the Company considers all undistributed foreign earnings and profits to be permanent in duration.

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- 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
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