14. INCOME TAXES

As of June 30, 2016, the Company had net deferred tax assets of $20,334, which is recorded as a non-current deferred tax asset of $20,560 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 $113 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 $113 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, 2016, $93 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, 2015, the Company had net deferred tax assets of $21,269, which is recorded as a non-current deferred tax asset of $21,498 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 $108 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 $121 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 $741 and $639 for the three months ended June 30, 2016 and 2015, respectively. Of the amount for the three months ended June 30, 2016, $375 relates to Silvercrest’s corporate tax expense, $364 relates to SLP’s state and local liability and $2 relates to SFS’s corporate tax expense.  The deferred tax expense for the three months ended June 30, 2016 and 2015 was $719 and $1,595, respectively. When combined with current tax expense, the total income tax provision for the three months ended June 30, 2016 and 2015 is $1,460 and $2,234, respectively.  The tax expense for the three months ended June 30, 2016 and 2015, also includes additional deferred tax expenses of $338 and $840, respectively, for discrete items. The discrete items for the three months ended June 30, 2016 are primarily attributable to adjustments to the value of deferred tax assets for SAMG.  The discrete items for the three months ended June 30, 2015 are primarily attributable 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.

The current tax expense was $1,461 and $1,292 for the six months ended June 30, 2016 and 2015, respectively. Of the amount for the six months ended June 30, 2016, $719 relates to Silvercrest’s corporate tax expense, $738 relates to SLP’s state and local liability and $4 relates to SFS’s corporate tax expense.  The deferred tax expense for the six months ended June 30, 2016 and 2015 was $1,087 and $2,240, respectively. When combined with current tax expense, the total income tax provision for the six months ended June 30, 2016 and 2015 is $2,548 and $3,532, respectively. The tax expense for the six months ended June 30, 2016 and 2015 also includes additional deferred tax expenses of $317 and $840, respectively, for discrete items. The discrete items for the six months ended June 30, 2016 are primarily attributable to adjustments to the value of deferred tax assets for SAMG and changes in apportionment relative to tax year 2016.  The discrete items for the six months ended June 30, 2015 are primarily attributable 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.    

The current tax expense increased from the comparable period in 2015 mainly due to increased taxable profitability during 2016.  The deferred tax expense decreased from the comparable period in 2015 primarily due to movements in discrete items recorded during the three months ended June 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 June 30, 2016 and 2015, $152 and $148, respectively, relates to non-controlling interests.  Of the deferred tax expense for the three months ended June 30, 2016 and 2015, $0 and $3, respectively, relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the three months ended June 30, 2016 and 2015 related to non-controlling interests is $152 and $151, respectively.

Of the total current tax expense for the six months ended June 30, 2016 and 2015, $307 and $276, respectively, relates to non-controlling interests.  Of the deferred tax expense (benefit) for the six months ended June 30, 2016 and 2015, ($1) and $6, respectively, relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the six months ended June 30, 2016 and 2015 related to non-controlling interests is $306 and $282, respectively.

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of June 30, 2016, the Company’s U.S. federal income tax returns for the years 2012 through 2015 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 June 30, 2016 and 2015.