14. INCOME TAXES

As of June 30, 2014, the Company had net deferred tax assets of $23,680, which is recorded as a non-current deferred tax asset of $23,841 specific to Silvercrest which consists primarily of assets related to temporary differences between the financial statement and tax bases of intangible assets related to its acquisition of partnership units of SLP, a non-current deferred tax liability of $54 specific to SLP which consists primarily of liabilities related to differences between the financial statement and tax bases of intangible assets offset in part by amounts for deferred rent expense and a non-current deferred tax liability of $107 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets.  Of the total net deferred taxes at June 30, 2014, $63 of the net deferred tax liabilities relate to non-controlling interests. These amounts are included in the prepaid expenses and other assets and deferred tax and other liabilities on the Condensed Consolidated Statements of Financial Position, respectively.

As of December 31, 2013, the Company had net deferred tax assets of $25,683, which is recorded as a non-current deferred tax asset of $25,831 specific to Silvercrest which consists primarily of assets related to temporary differences between the financial statement and tax bases of intangible assets related to its acquisition of partnership units of SLP, a non-current deferred tax liability of $34 specific to SLP which consists primarily of liabilities related to differences between the financial statement and tax bases of intangible assets offset in part by amounts for deferred rent expense, and a non-current deferred tax liability of $114 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets. These amounts are included in the prepaid expenses and other assets and deferred tax and other liabilities in the Consolidated Statement of Financial Condition, respectively.

The current tax expense was $342 and $309 for the three months ended June 30, 2014 and 2013, respectively. Of the amount for the three months ended June 30, 2014, ($26) relates to Silvercrest’s corporate tax expense, $367 relates to SLP’s UBT liability and $1 relates to SFS’s corporate tax expense.  The deferred tax expense for the three months ended June 30, 2014 and 2013 was $991 and $29, respectively. When combined with current tax expense, the total income tax provision for the six months ended June 30, 2014 and 2013 is $1,333 and $338, respectively.

The current tax expense was $784 and $591 for the six months ended June 30, 2014 and 2013, respectively. Of the amount for the six months ended June 30, 2014, $86 relates to Silvercrest’s corporate tax expense, $695 relates to SLP’s UBT liability and $3 relates to SFS’s corporate tax expense.  The deferred tax expense for the six months ended June 30, 2014 and 2013 was $2,004 and $73, respectively. When combined with current tax expense, the total income tax provision for the six months ended June 30, 2014 and 2013 is $2,788 and $667, respectively.

The current expense increased from the comparable period for 2013 mainly due to corporate taxes at Silvercrest, which did not previously exist and increased profitability during 2014. The deferred expense difference is attributable primarily to the movement in deferred tax accounts with respect to various intangible assets between 2013 and 2014. The deferred tax expense for the three months ended June 30, 2014 also includes additional deferred tax expense of ($29) for discrete items. The deferred tax expense for the six months ended June 30, 2014 also includes additional deferred tax expense of $215 for discrete items.  The discrete items are primarily attributable to the decrease of deferred tax assets at Silvercrest due to a reductions in the future statutory corporate tax rates in New York State.

Of the total current tax expense for the three months ended June 30, 2014, $156 relates to non-controlling interests.  Of the deferred tax expense for the three months ended June 30, 2014, $3 relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the three months ended June, 2014 related to non-controlling interests is $159.    

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. Of the total current tax expense for the six months ended June 30, 2014, $270 relates to non-controlling interests.  Of the deferred tax expense for the six months ended June 30, 2014, $5 relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the six months ended June, 2014 related to non-controlling interests is $275.    

As of June 30, 2014, the Company’s U.S. federal income tax returns for the years 2010 through 2013 are open under the normal three-year statute of limitations and therefore subject to examination.

The Company does not believe that it has any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.