14. INCOME TAXES

As of September 30, 2024, the Company had net deferred tax assets of $3,456, which is recorded as a deferred tax asset of $3,749 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 $293 specific to SLP which consists primarily of assets related to deferred rent expenses offset in part by amounts for differences in the financial statement and tax bases of intangible assets and a deferred tax liability of $1 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, 2024, $96 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, 2023, the Company had a net deferred tax asset of $4,777, which is recorded as a net deferred tax asset of $5,034 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 $254 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 $3 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 Company has recorded a deferred tax asset associated with net operating losses of its foreign subsidiary. Realization of the deferred tax asset is contingent on the foreign subsidiary generating future taxable income. Given the foreign subsidiary has recently initiated operations and does not yet have a history of sales, the Company has concluded that the deferred tax asset does not currently meet the more-likely-than-not threshold for realizability. Accordingly, a full valuation allowance has been recorded with respect to the net operating losses of the Company’s foreign subsidiary in the amount of $268 at September 30, 2024. As of December 31, 2023, the amount of the valuation allowance was $141.

The current tax expense was $356 and $935 for the three months ended September 30, 2024 and 2023, respectively. Of the amount for the three months ended September 30, 2024, $175 relates to Silvercrest’s corporate tax expense, $181 relates to SLP’s state and local liability and $0 relates to SFS’s corporate tax expense. The deferred tax expense for the three months ended September 30, 2024 and 2023 was $740 and $457, respectively. When combined with current tax expense, the total income tax provision for the three months ended September 30, 2024 and 2023 is $1,096 and $1,392, respectively. There was no material discrete tax expense for both the three months ended September 30, 2024 and 2023.

The current tax expense was $2,092 and $2,522 for the nine months ended September 30, 2024 and 2023, respectively. Of the amount for the nine months ended September 30, 2024, $1,471 relates to Silvercrest’s corporate tax expense, $621 relates to SLP’s state and local liability and $0 relates to SFS’s corporate tax expense. The deferred tax expense for the nine months ended September 30, 2024 and 2023 was $1,493 and $1,579, respectively. When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2024 and 2023 is $3,585 and $4,101, respectively. There was no material discrete tax expense for the nine months ended September 30, 2024 and 2023.

The current tax expense increased from the comparable period in 2023 mainly due to unfavorable movements in the temporary differences between financial statement and tax treatment of equity-based compensation at SLP.

Of the total current tax expense for the three months ended September 30, 2024 and 2023, $59 and $90, respectively, relates to non-controlling interests. Of the deferred tax expense for the three months ended September 30, 2024 and 2023, $4 and $1, respectively, relates to non-controlling interests. When combined with current tax expense, the total income tax provision for the three months ended September 30, 2024 and 2023 related to non-controlling interests is $63 and $91, respectively.

Of the total current tax expense for the nine months ended September 30, 2024 and 2023, $203 and $250, respectively, relates to non-controlling interests. Of the deferred tax expense for the nine months ended September 30, 2024 and 2023, $12 and $17, respectively, relates to non-controlling interests. When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2024 and 2023 related to non-controlling interests is $215 and $267, respectively.

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of September 30, 2024, the Company’s U.S. federal income tax returns for the years 2021 through 2023 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, 2024 and 2023.