14. INCOME TAXES

As of September 30, 2015, the Company had net deferred tax assets of $22,098, which is recorded as a non-current deferred tax asset of $22,286 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 $97 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 $91 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 September 30, 2015, $79 of the net deferred tax liabilities relate to non-controlling interests. These amounts are included in prepaid expenses and other assets and deferred tax and other liabilities on the Condensed Consolidated Statement of Financial Condition, respectively.

As of December 31, 2014, the Company had net deferred tax assets of $22,835, which is recorded as a non-current deferred tax asset of $23,000 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 net non-current deferred tax liability of $64 specific to SLP which consists primarily of liabilities related to differences between the financial statement and tax bases of intangible assets and a non-current deferred tax liability of $101 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 prepaid expenses and other assets and deferred tax and other liabilities in the Condensed Consolidated Statement of Financial Condition, respectively.

The current tax expense was $1,278 and $990 for the three months ended September 30, 2015 and 2014, respectively. Of the amount for the three months ended September 30, 2015, $896 relates to Silvercrest’s corporate tax expense, $381 relates to SLP’s state and local liability and $3 relates to SFS’s corporate tax expense.  The deferred tax expense for the three months ended September 30, 2015 and 2014 was $156 and $475, respectively. When combined with current tax expense, the total income tax provision for the three months ended September 30, 2015 and 2014 is $1,434 and $1,465, respectively.  The tax expense for the three months ended September 30, 2015, also includes additional deferred tax expenses of $218 for discrete items. The discrete items are primarily attributable to return-to-provision adjustments recorded in the quarter relative to tax year 2014.

The current tax expense was $2,570 and $1,774 for the nine months ended September 30, 2015 and 2014, respectively. Of the amount for the nine months ended September 30, 2015, $1,440 relates to Silvercrest’s corporate tax expense, $1,127 relates to SLP’s state and local liability and $1 relates to SFS’s corporate tax expense.  The deferred tax expense for the nine months ended September 30, 2015 and 2014 was $2,396 and $2,479, respectively.  When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2015 and 2014 is $4,966 and $4,253, respectively.  The deferred tax expense for the nine months ended September 30, 2015, also includes additional deferred tax expenses of $1,058 for discrete items.

The current tax expense increased from the comparable period in 2014 mainly due to increased profitability during 2015.  The deferred tax expense decreased from the comparable period in 2014 primarily due to movements in discrete item recorded during the nine months ended September 30, 2015 related to a reduction in future statutory corporate tax rates in New York State and changes in the rules with respect to sourcing sales in New York City.

Of the total current tax expense for the three months ended September 30, 2015 and 2014, $161 and $100, respectively, relates to non-controlling interests.  Of the deferred tax expense for the three months ended September 30, 2015 and 2014, $3 and $4, respectively, relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the three months ended September 30, 2015 and 2014 related to non-controlling interests is $164 and $104, respectively.

Of the total current tax expense for the nine months ended September 30, 2015 and 2014, $437 and $370, respectively, relates to non-controlling interests.  Of the deferred tax expense for the nine months ended September 30, 2015 and 2014, $9 and $9, respectively, relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2015 and 2014 related to non-controlling interests is $446 and $379, respectively.      

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of September 30, 2015, the Company’s U.S. federal income tax returns for the years 2012 through 2014 are open under the normal three-year statute of limitations and therefore subject to examination.

The guidance for accounting for uncertainty in income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. 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.  Furthermore, the Company does not have any material uncertain tax positions at September 30, 2015 and 2014.