14. INCOME TAXES

As of September 30, 2017, the Company had net deferred tax assets of $18,962, which is recorded as a deferred tax asset of $19,204 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 deferred tax liability of $92 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 deferred tax liability of $150 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, 2017, $98 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, 2016, the Company had a net deferred tax asset of $19,989, which is recorded as a net deferred tax asset of $20,221 specific to Silvercrest, which consists primarily of net assets related to temporary differences between the financial statement and tax bases of intangibles related to its acquisition of partnership units of SLP, a net deferred tax liability of $128 specific to SLP which consists primarily of liabilities related to differences between the financial statement and tax bases of intangible assets, and a net deferred tax liability of $104 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets.  

The current tax expense was $1,238 and $900 for the three months ended September 30, 2017 and 2016, respectively. Of the amount for the three months ended September 30, 2017, $752 relates to Silvercrest’s corporate tax expense, $484 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 September 30, 2017 and 2016 was $366 and $140, respectively.  When combined with current tax expense, the total income tax provision for the three months ended September 30, 2017 and 2016 is $1,604 and $1,041, respectively.  The tax expense for the three months ended September 30, 2017 and 2016, also includes additional tax (benefits) expense of $0 and ($269), respectively, for discrete items.  The discrete items for the three months ended September 30, 2016 are primarily attributable to adjustments to the value of deferred tax assets for SAMG.  

The current tax expense was $3,302 and $2,362 for the nine months ended September 30, 2017 and 2016, respectively. Of the amount for the nine months ended September 30, 2017, $1,879 relates to Silvercrest’s corporate tax expense, $1,418 relates to SLP’s state and local liability and $5 relates to SFS’s corporate tax expense.  The deferred tax expense for the nine months ended September 30, 2017 and 2016 was $1,273 and $1,227, respectively.  When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2017 and 2016 is $4,575 and $3,589, respectively.  The tax expense for the nine months ended September 30, 2017 and 2016, also includes additional tax (benefits) expense of ($32) and $47, respectively, for discrete items. The discrete items for the nine months ended September 30, 2017 are primarily attributable to adjustments to the value of deferred tax assets for SAMG.  The discrete items for the nine months ended September 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 current tax expense increased from the comparable period in 2016 mainly due to an increase in Silvercrest’s profits.

Of the total current tax expense for the three months ended September 30, 2017 and 2016, $197 and $179, respectively, relates to non-controlling interests.  Of the deferred tax expense for the three months ended September 30, 2017 and 2016, $0 and $2, respectively, relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the three months ended September 30, 2017 and 2016 related to non-controlling interests is $197 and $181, respectively.  

Of the total current tax expense for the nine months ended September 30, 2017 and 2016, $579 and $485, respectively, relates to non-controlling interests.  Of the deferred tax expense for the nine months ended September 30, 2017 and 2016, $4 and $0, respectively, relates to non-controlling interests.  When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2017 and 2016 related to non-controlling interests is $583 and $485, respectively.

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of September 30, 2017, the Company’s U.S. federal income tax returns for the years 2013 through 2016 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, 2017 and 2016.