XML 45 R29.htm IDEA: XBRL DOCUMENT
v3.21.2

Income Taxes | 9 Months Ended
--- | ---
Sep. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 20. Income Taxes Effective Income Tax Rate – Three and Nine Months Ended September 30, 2021 The Company’s effective income tax rate during the three months ended September 30, 2021 of 7.9% resulted in income tax expense of $500. The effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a lower tax rate on foreign earnings and a non-taxable gain on revaluation of deferred consideration, partly offset by higher non-deductible compensation. The Company’s effective income tax rate for the nine months ended September 30, 2021 of 6.7% resulted in income tax expense of $2,790. The effective income tax rate differs from the federal statutory rate of 21% primarily due to a $5,171 reduction in unrecognized tax benefits, a lower tax rate on foreign earnings and a non-taxable gain on revaluation of deferred consideration. These items were partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation and non-deductible executive compensation. Effective Income Tax Rate – Three and Nine Months Ended September 30, 2020 The Company’s effective income tax rate during the three months ended September 30, 2020 of 123.7% resulted in an income tax expense of $1,408. The effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a non-deductible loss on revaluation of deferred consideration. This loss was partly offset by a lower tax rate on foreign earnings. The Company’s effective income tax rate for the nine months ended September 30, 2020 of 7.4% resulted in an income tax benefit of $1,767. The effective income tax rate differs from the federal statutory rate of 21% primarily due to a valuation allowance on capital losses, a non-deductible loss on revaluation of deferred consideration and tax shortfalls associated with the vesting and exercise of stock-based compensation awards. These items were partly offset by a $5,981 reduction in unrecognized tax benefits, a $2,877 non-taxable gain recognized upon sale of the Canadian ETF business in the first quarter of 2020, a tax benefit of $2,842 recognized in connection with the release of a deferred tax asset valuation allowance on interest carryforwards arising from the Company’s debt previously held in the United Kingdom 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, 2021 and December 31, 2020 are as follows:
|  | September 30, 2021 |  |  | December 31, 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Capital losses |  | $ | 16,368 |  |  | $ | 16,596 |
Accrued expenses |  |  | 3,560 |  |  |  | 3,507 |
NOLs – Foreign |  |  | 2,016 |  |  |  | 2,167 |
Goodwill and intangible assets |  |  | 1,323 |  |  |  | 1,466 |
Interest carryforwards |  |  | 1,223 |  |  |  | 2,235 |
Stock-based compensation |  |  | 1,045 |  |  |  | 1,922 |
Unrealized losses |  |  | 467 |  |  |  | 15 |
NOLs – U.S. |  |  | 382 |  |  |  | 510 |
Outside basis differences |  |  | 122 |  |  |  | 122 |
Operating lease liabilitie s |  |  | — |  |  |  | 4,953 |
Othe r |  |  | 315 |  |  |  | 96 |
Deferred tax assets |  |  | 26,821 |  |  |  | 33,589 |
Deferred tax liabilities: |  |  |  |  |
Fixed assets and prepaid assets |  |  | 267 |  |  |  | 1,261 |
Foreign currency translation adjustment |  |  | 226 |  |  |  | 293 |
Unremitted earnings – International subsidiaries |  |  | 185 |  |  |  | 138 |
Right of use assets – operating leases |  |  | — |  |  |  | 3,927 |
Allocated equity component of convertible notes |  |  | — |  |  |  | 1,022 |
Deferred tax liabilitie s |  |  | 678 |  |  |  | 6,641 |
Total deferred tax assets less deferred tax liabilities |  |  | 26,143 |  |  |  | 26,948 |
Less: valuation allowance |  |  | (18,507 | ) |  |  | (18,885 | )
Deferred tax assets, net |  | $ | 7,636 |  |  | $ | 8,063 |
Net Operating and Capital Losses – U.S . The Company’s tax effected net operating losses (“NOLs”) at September 30, 2021 were $382 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 were $16,368 at September 30, 2021. These capital losses expire between the years 2023 and 2025. Net Operating Losses – International One of the Company’s European subsidiar ie s generated NOLs outside the U.S. These tax effected NOLs, all of which are carried forward indefinitely, were $2,016 at September 30, 2021. Valuation Allowance The Company’s valuation allowance has been established on its net capital losses, international net operating losses and outside basis differences, as it is more-likely-than-not that these deferred tax assets will not be realized. 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, 2021:
|  | Total |  |  | Unrecognized Tax Benefits |  |  | Interest and Penalties |
Balance on January 1, 2021 |  | $ | 27,016 |  |  | $ | 21,850 |  |  | $ | 5,166 |
Decrease - Lapse of statute of limitations (1) |  |  | (5,171 | ) |  |  | (3,559 | ) |  |  | (1,612 | )
Increases |  |  | 39 |  |  |  | — |  |  |  | 39 |
Foreign currency translation (2) |  |  | 338 |  |  |  | 273 |  |  |  | 65 |
Balance at March 31, 2021 |  | $ | 22,222 |  |  | $ | 18,564 |  |  | $ | 3,658 |
Increases |  |  | 40 |  |  |  | — |  |  |  | 40 |
Foreign currency translation (2) |  |  | 165 |  |  |  | 138 |  |  |  | 27 |
Balance at June 30, 2021 |  | $ | 22,427 |  |  | $ | 18,702 |  |  | $ | 3,725 |
Increases |  |  | 39 |  |  |  | — |  |  |  | 39 |
Foreign currency translation (2) |  |  | (594 | ) |  |  | (496 | ) |  |  | (98 | )
Balance at September 30, 2021 |  | $ | 21,872 |  |  | $ | 18,206 |  |  | $ | 3,666 |
(1) | Recorded as an income tax benefit of $5,171 during the nine months ended September 30, 2021, along with an equal and offsetting amount recorded in other gains and losses, net, to recognize a reduction in the indemnification asset. During the nine months ended September 30, 2020, an income tax benefit of $5,981 was recorded along with an equal and offsetting amount in other gains and losses, net.
(2) | 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 gross unrecognized tax benefits and interest and penalties totaling $21,872 at September 30, 2021 are included in other non-current liabilities on the Company’s Consolidated Balance Sheets. It is reasonably possible that the total amount of unrecognized tax benefits will decrease by $6,995 (including interest and penalties of $2,041) in the next 12 months upon lapsing of the statute of limitations. At September 30, 2021, there were $21,872 of unrecognized tax benefits (including interest and penalties) 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. ManJer’s tax returns (a Jersey-based subsidiary) for the years ended December 31, 2014 through 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, 2021, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for years before 2016. Undistributed Earnings of Foreign Subsidiaries ASC 740-30 Income Taxes , provides guidance that US companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested. The Company repatriates earnings of its foreign subsidiaries and therefore has recognized a deferred tax liability of $185 and $138 at September 30, 2021 and December 31, 2020, respectively.

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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration