15. INCOME TAXES

Prior to February 11, 2014, the Company had not been subject to U.S. federal income taxes as the predecessor entity is an LLLP, but had been subject to the New York City Unincorporated Business Tax (“NYC UBT”). As a result of the IPO, a portion of the Company’s income will be subject to U.S. federal, state and local income taxes and taxed at the prevailing corporate tax rates.

Components of the provision for income taxes consist of the following:

	Three Months Ended March 31, 2014
Current expense
Federal	$	5,366,975
State and local	1,805,512
Total current expense	7,172,487
Deferred expense/(benefit)
Federal	(1,521,455		)
State and local	(361,815		)
Total deferred expense/(benefit)	(1,883,270		)
Provision for income tax expense	$	5,289,217

Corporate taxes payable as of March 31, 2014 were $6,661,704. There were no corporate taxes payable as of December 31, 2013. NYC UBT taxes payable (receivable) at March 31, 2014 and December 31, 2013 were ($95,815) and $482,324, respectively.

A reconciliation between the U.S. federal statutory income tax rate and the effective tax rate for the period ended March 31, 2014 is as follows:

	Three Months Ended March 31, 2014

US statutory tax rate	35.00	%
Increase due to state and local taxes	4.65	%
Benefit of partnership income not subject to taxation	-17.32	%
Effective income tax rate	22.33	%

The Company’s net deferred tax assets were $1,577,319 as of March 31, 2014. We believe it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change. The components of the Company’s deferred tax assets and liabilities are as follows:

	As of March 31, 2014
Deferred Tax Assets
Depreciation	$	933,065
Equity based compensation	950,204
Unrealized gains and losses	297,344
Total Deferred Tax Assets	$	2,180,613

Deferred Tax Liabilities
Unrealized gains and losses	603,294
Total Deferred Tax Assets	$	603,294

Net Deferred Tax Assets/(Liabilities)	$	1,577,319

Our tax returns are subject to audit by taxing authorities. With a few exceptions, as of March 31, 2014 the tax years 2010, 2011 and 2012 remain open to examination by the major taxing jurisdictions in which we are subject to taxes. U.S. federal and state taxing authorities are currently examining income tax returns of various subsidiaries of the Company for tax years 2010 through 2012. The Company believes that the audits will result in no material changes, however, these audits can often take a long time to complete and settle and there can be no assurances as to the possible outcomes.

Under U.S. GAAP, a tax benefit related to an income tax position may be recognized when it is more likely than not that the position will be sustained upon examination by the tax authorities based on the technical merits of the position. The Company determined that no liability for unrecognized tax benefits for uncertain income tax positions was required to be recorded as of March 31, 2014. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months.