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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | 22. Income Taxes Income/(loss ) before Income Tax Expense – Domestic and Foreign The U.S. and foreign components of income/(loss) before income tax expense for the years ended December 31, 2022, 2021 and 2020 are as follows:
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
U.S. |  | $ | (4,067 | ) |  | $ | 15,986 |  |  | $ | (5,187 | )
Foreign |  |  | 44,017 |  |  |  | 40,685 |  |  |  | (30,035 | )
Total |  | $ | 39,950 |  |  | $ | 56,671 |  |  | $ | (35,222 | )
Income Tax Expense/(Benefit) – By Jurisdiction The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2022, 2021 and 2020 are as follows:
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,685 |  |  | $ | 5,857 |  |  | $ | 3,670 |
State and local |  |  | 1,415 |  |  |  | 1,538 |  |  |  | 832 |
Foreign |  |  | (15,538 | ) |  |  | (837 | ) |  |  | (1,877 | )
|  | $ | (9,438 | ) |  | $ | 6,558 |  |  | $ | 2,625 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (6 | ) |  | $ | (1,217 | ) |  | $ | 60 |
State and local |  |  | (1 | ) |  |  | (251 | ) |  |  | 13 |
Foreign |  |  | (1,289 | ) |  |  | 1,784 |  |  |  | (2,265 | )
|  | $ | (1,296 | ) |  | $ | 316 |  |  | $ | (2,192 | )
Income tax expense/(benefit) |  | $ | (10,734 | ) |  | $ | 6,874 |  |  | $ | 433 |
Reconciliation of Statutory Federal Income Tax Rate to the Effective Income Tax Rate A reconciliation of the statutory federal income tax expense and the Company’s total income tax expense is as follows:
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
U.S. federal statutory income tax |  | $ | 8,386 |  |  | $ | 11,901 |  |  | $ | (7,397 | )
Decrease in unrecognized tax benefits, net |  |  | (19,871 | ) |  |  | (4,998 | ) |  |  | (5,661 | )
Change in valuation allowance – Capital losses |  |  | 4,761 |  |  |  | 5 |  |  |  | 4,448 |
Change in tax-related indemnification assets, net |  |  | 4,173 |  |  |  | 1,053 |  |  |  | 1,189 |
Foreign operations |  |  | (2,919 | ) |  |  | (3,211 | ) |  |  | (3,342 | )
Change in valuation allowance—Foreign net operating losses (“NOLs”) and interest carryforwards |  |  | (1,609 | ) |  |  | — |  |  |  | (2,018 | )
(Gain)/loss on revaluation of deferred consideration (1) |  |  | (5,842 | ) |  |  | (424 | ) |  |  | 11,929 |
GILTI |  |  | 499 |  |  |  | — |  |  |  | — |
Non-deductible executive compensation |  |  | 789 |  |  |  | 881 |  |  |  | 399 |
Stock-based compensation tax shortfalls |  |  | 507 |  |  |  | 647 |  |  |  | 1,485 |
Blended state income tax rate, net of federal benefit |  |  | (134 | ) |  |  | 526 |  |  |  | (171 | )
Non-taxable gain on sale—Canadian ETF business |  |  | — |  |  |  | — |  |  |  | (740 | )
Other differences, net |  |  | 526 |  |  |  | 494 |  |  |  | 312 |
Income tax expense/(benefit) |  | $ | (10,734 | ) |  | $ | 6,874 |  |  | $ | 433 |
(1) | The (gain)/loss on revaluation of deferred consideration is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary that is based in Jersey, a jurisdiction where the Company is subject to a zero percent tax rate.
Income Tax Payments A summary of income taxes paid by jurisdiction for the years ended December 31, 2022, 2021 and 2020 is as follows:
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Federal |  | $ | 6,424 |  |  | $ | 4,258 |  |  | $ | 4,470 |
State and local |  |  | 1,431 |  |  |  | 1,020 |  |  |  | 1,353 |
Foreign |  |  | 4,645 |  |  |  | 3,178 |  |  |  | 4,308 |
|  | $ | 12,500 |  |  | $ | 8,456 |  |  | $ | 10,131 |
Deferred Tax Assets A summary of the components of the Company’s deferred tax assets at December 31, 2022 and 2021 is as follows:
|  | 2022 |  | 2021
Deferred tax assets: |  |  |  |  |  |  |  |
Capital losses |  | $ | 17,541 |  |  | $ | 16,601 |
Accrued expenses |  |  | 6,030 |  |  |  | 4,993 |
Unrealized losses |  |  | 3,821 |  |  |  | 614 |
NOLs—Foreign |  |  | 1,609 |  |  |  | 1,934 |
Stock-based compensation |  |  | 1,526 |  |  |  | 1,359 |
Goodwill and intangible assets |  |  | 1,085 |  |  |  | 1,276 |
Operating lease liabilities |  |  | 313 |  |  |  | — |
NOLs—U.S. |  |  | 255 |  |  |  | 382 |
Foreign currency translation adjustment |  |  | 173 |  |  |  | — |
Outside basis differences |  |  | 122 |  |  |  | 122 |
Interest carryforwards |  |  | — |  |  |  | 437 |
Other |  |  | 341 |  |  |  | 376 |
Deferred tax assets |  |  | 32,816 |  |  |  | 28,094 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets and prepaid assets |  |  | 278 |  |  |  | 257 |
Foreign currency translation adjustment |  |  | — |  |  |  | 181 |
Unremitted earnings—European subsidiaries |  |  | 205 |  |  |  | 118 |
Right of use assets—operating leases |  |  | 313 |  |  |  | — |
Deferred tax liabilities |  |  | 796 |  |  |  | 556 |
Total deferred tax assets less deferred tax liabilities |  |  | 32,020 |  |  |  | 27,538 |
Less: Valuation allowance |  |  | (21,484 | ) |  |  | (18,657 | )
Deferred tax assets, net |  | $ | 10,536 |  |  | $ | 8,881 |
Net Operating and Capital Losses – U.S. The Company’s tax effected net operating losses (“NOLs”) at December 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 December 31, 2022 were $17,541. These capital losses expire between the years 2023 and 2027. Net Operating Losses – Europe 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 $1,609 at December 31, 2022. Valuation Allowance The Company’s valuation allowance has been established on its net capital losses, unrealized losses and outside basis differences, as it is more-likely-than-not that these deferred tax assets will not be realized. During the year ended December 31, 2022, the Company released the valuation allowance on its European net operating losses of $ 1,609 as it is more-likely-than-not that these deferred tax assets will 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 at January 1, 2021 |  | $ | 27,016 |  |  | $ | 21,850 |  |  | $ | 5,166 |
Decrease—Lapse of statute of limitations (1) |  |  | (5,171 | ) |  |  | (3,559 | ) |  |  | (1,612 | )
Increases |  |  | 173 |  |  |  | — |  |  |  | 173 |
Foreign currency translation (2) |  |  | (93 | ) |  |  | (73 | ) |  |  | (20 | )
Balance at December 31, 2021 |  | $ | 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 |  |  | 26 |  |  |  | — |  |  |  | 26 |
Foreign currency translation (2) |  |  | (701 | ) |  |  | (571 | ) |  |  | (130 | )
Balance at December 31, 2022 |  | $ | 1,353 |  |  | $ | 957 |  |  | $ | 396 |
(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 year ended December 31, 2022 was recorded as an income tax benefit along with an equal and offsetting amount recorded in other losses and gains, net, to recognize a reduction in the indemnification asset. During the year ended December 31, 2021, an income tax benefit of $5,171 was recorded upon the lapse of the statute of limitations with an equal and offsetting amount in other losses and gains, net.
(2) | The gross unrecognized tax benefits were accrued in British pounds.
The gross unrecognized tax benefits and interest and penalties totaling $1,353 and $21,925 at December 31, 2022 and 2021, respectively, are included in other non-current liabilities on the Consolidated Balance Sheets. It is reasonably possible that the remaining amount of 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. As of December 31, 2022, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for the years before 2018. 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. In addition, the Company’s tax returns were previously under review by the State of Michigan for the years ended 2017 through 2020. In August 2022, the audit was resolved in favor of the Company. 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 $205 and $118 at December 31, 2022 and 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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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