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Income Taxes | 3 Months Ended
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Mar. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | 20. Income Taxes Effective Income Tax Rate – Three Months Ended March 31, 2022 and March 31, 2021 The Company’s effective income tax rate during the three months ended March 31, 2022 of 62.0% resulted in an income tax benefit of $16,713. The effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a $19,897 reduction in unrecognized tax benefits (including interest and penalties), a lower tax rate on foreign earnings and tax windfalls associated with the vesting of stock-based compensation awards. These items were partly offset by a non-taxable loss on revaluation of deferred consideration and an increase in the deferred tax asset valuation allowance on losses recognized on securities owned. The Company’s effective income tax rate for the three months ended March 31, 2021 of negative 14.9% resulted in an income tax benefit of $1,969. The Company’s effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a $5,171 reduction in unrecognized tax benefits (including interest and penalties), a non-taxable gain on revaluation of deferred consideration and a lower tax rate on foreign earnings, partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation awards. Deferred Tax Assets A summary of the components of the Company’s deferred tax assets at March 31, 2022 and December 31, 2021 are as follows:
|  | March 31, 2022 |  |  | December 31, 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Capital losses |  | $ | 16,818 |  |  | $ | 16,601 |
NOLs – Foreign |  |  | 1,846 |  |  |  | 1,934 |
Unrealized losses |  |  | 1,794 |  |  |  | 614 |
Accrued expenses |  |  | 1,263 |  |  |  | 4,993 |
Goodwill and intangible assets |  |  | 1,228 |  |  |  | 1,276 |
Interest carryforwards |  |  | 604 |  |  |  | 437 |
Stock-based compensation |  |  | 469 |  |  |  | 1,359 |
NOLs – U.S. |  |  | 255 |  |  |  | 382 |
Outside basis differences |  |  | 122 |  |  |  | 122 |
Other |  |  | 362 |  |  |  | 376 |
Deferred tax assets |  |  | 24,761 |  |  |  | 28,094 |
|  | March 31, 2022 |  |  | December 31, 2021 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets and prepaid assets |  |  | 158 |  |  |  | 257 |
Unremitted earnings – International subsidiaries |  |  | 146 |  |  |  | 118 |
Unrealized gains |  |  | 91 |  |  |  | — |
Foreign currency translation adjustment |  |  | 52 |  |  |  | 181 |
Deferred tax liabilities |  |  | 447 |  |  |  | 556 |
Total deferred tax assets less deferred tax liabilities |  |  | 24,314 |  |  |  | 27,538 |
Less: Valuation allowance |  |  | (20,580 | ) |  |  | (18,657 | )
Deferred tax assets, net |  | $ | 3,734 |  |  | $ | 8,881 |
Net Operating and Capital Losses – U.S. The Company’s tax effected net operating losses (“NOLs”) at March 31, 2022 were $255, 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 March 31, 2022 were $16,818. These capital losses expire between the years 2023 and 2027. Net Operating Losses – International One of the Company’s European subsidiaries generated NOLs outside the U.S. These tax effected NOLs, all of which are carried forward indefinitely, were $1,846 at March 31, 2022. Valuation Allowance The Company’s valuation allowance has been established on its net capital losses, international net operating losses, unrealized 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 Company also recorded an offsetting indemnification asset provided by ETFS Capital as part of its agreement to indemnify the Company for any potential claims. The table below sets forth the aggregate changes in the balance of these gross unrecognized tax benefits:
|  | Total |  |  | Unrecognized Tax Benefits |  |  | Interest and Penalties |
Balance on January 1, 2022 |  | $ | 21,925 |  |  | $ | 18,218 |  |  | $ | 3,707 |
Decrease - Settlements (1) |  |  | (13,052 | ) |  |  | (11,865 | ) |  |  | (1,187 | )
Decrease - Lapse of statute of limitations (1) |  |  | (6,845 | ) |  |  | (4,825 | ) |  |  | (2,020 | )
Increases |  |  | 7 |  |  |  | — |  |  |  | 7 |
Foreign currency translation (2) |  |  | (583 | ) |  |  | (485 | ) |  |  | (98 | )
Balance at March 31, 2022 |  | $ | 1,452 |  |  | $ | 1,043 |  |  | $ | 409 |
| (1) | In January 2022, an audit of ManJer’s tax returns (a Jersey-based subsidiary) for the years ended December 31, 2014, 2016, 2017 and 2018 were resolved in favor of ManJer. The settlement, as well as the reduction in unrecognized tax benefits from the lapse of the statute of limitations totaling $19,897 during the three months ended March 31, 2022, was recorded as an income tax benefit with an equal and offsetting amount recorded in other losses, net, to recognize a reduction in the indemnification asset. During the three months ended March 31, 2021, an income tax benefit of $5,171 was recorded along with an equal and offsetting amount in other losses, net.
| (2) | The gross unrecognized tax benefits were accrued in British pounds.
The gross unrecognized tax benefits and interest and penalties totaling $1,451 at March 31, 2022 are included in other non-current liabilities in the Consolidated Balance Sheets. It is reasonably possible that these unrecognized tax benefits will reduce to zero in the next 12 months upon lapsing of the statute of limitations. If recognized, these unrecognized tax benefits 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 and is currently under review by the State of Michigan for the years ended 2017 through 2020. As of March 31, 2022, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for the years before 2017. ManJer’s tax returns (a Jersey-based subsidiary) were previously under review for the years ended December 31, 2014, 2016, 2017 and 2018. In January 2022, the audit was resolved in favor of ManJer. 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 $146 and $118 at March 31, 2022 and December 31, 2021, respectively.

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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://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
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