Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

14. INCOME TAXES

Income before tax expense for 2025 was $11,047. Of this amount $12,622 is from domestic sources and ($1,575) is from foreign sources. Income before tax expense for 2024 was $20,272. Of this amount $21,288 is from domestic sources and ($1,016) is from foreign sources. Income before tax expense for 2023 was $19,493. Of this amount $19,921 is from domestic sources and ($428) is from foreign sources.

 

Year Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

Current Provision:

 

 

 

 

 

 

 

 

 

Federal

 

$

242

 

 

$

1,228

 

 

$

823

 

State and local

 

 

795

 

 

 

1,321

 

 

 

1,301

 

Foreign

 

 

—

 

 

 

—

 

 

 

—

 

Total Current Provision

 

 

1,037

 

 

 

2,549

 

 

 

2,124

 

Deferred Provision:

 

 

 

 

 

 

 

 

 

Federal

 

 

1,423

 

 

 

1,466

 

 

 

1,671

 

State and local

 

 

528

 

 

 

548

 

 

 

515

 

Foreign

 

 

—

 

 

 

—

 

 

 

—

 

Total Deferred Provision

 

 

1,951

 

 

 

2,014

 

 

 

2,186

 

Total Provision for Income Taxes

 

$

2,988

 

 

$

4,563

 

 

$

4,310

 

 

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their bases for income tax purposes.

As of December 31, 2025 and 2024, the Company had a net deferred tax asset of $1,110 and $3,924, respectively.

A summary of deferred tax assets and liabilities as follows:

 

 

As of December 31,

 

 

2025

 

 

2024

 

Deferred tax assets

 

 

 

 

 

 

Intangible assets

 

$

9,111

 

 

$

9,821

 

Net operating losses

 

 

39

 

 

 

—

 

Net operating losses, foreign subsidiary

 

 

598

 

 

 

308

 

Deferred leases

 

 

3,405

 

 

 

287

 

Other

 

 

—

 

 

 

63

 

Total deferred tax assets

 

$

13,153

 

 

$

10,479

 

Deferred tax liabilities

 

 

 

 

 

 

Intangible assets

 

$

6,997

 

 

$

4,797

 

Fixed assets

 

 

2,990

 

 

 

1,190

 

Right of use assets

 

 

951

 

 

 

206

 

Other

 

 

507

 

 

 

54

 

Total deferred tax liabilities

 

 

11,445

 

 

 

6,247

 

Net deferred tax assets (liabilities)

 

 

1,708

 

 

 

4,232

 

Less: Valuation allowance

 

 

(598

)

 

 

(308

)

Net deferred tax assets (liabilities)

 

$

1,110

 

 

$

3,924

 

 

The following table reconciles the 2025 provision for income taxes to the U.S. Federal statutory tax rate on a prospective basis as required by ASU 2023-09:

 

 

Year Ended December 31,

 

 

2025

 

Statutory U.S. federal income tax rate

 

 

21.00

%

 

$

2,320

 

State and local income taxes1

 

 

9.14

%

 

 

1,010

 

Unrecognized tax benefits

 

 

2.88

%

 

 

318

 

Foreign tax effects

 

 

 

 

 

 

Singapore

 

 

 

 

 

 

Valuation allowance

 

 

2.57

%

 

 

284

 

Foreign rate differential

 

 

0.57

%

 

 

63

 

Nontaxable or Nondeductible items

 

 

 

 

 

 

Non-controlling interest

 

 

(6.84

)%

 

 

(756

)

Other

 

 

0.23

%

 

 

25

 

Other

 

 

(2.50

)%

 

 

(276

)

Effective income tax rate

 

 

27.05

%

 

$

2,988

 

1 State and local taxes in New York made up the majority (greater than 50%) of the tax effect in this category.

 

Below is a historical reconciliation of the 2024 and 2023 provision for income taxes to the U.S Federal statutory tax rate prior to the introduction of ASU 2023-09:

 

 

Year Ended December 31,

 

 

2024

 

2023

 

Statutory U.S. federal income tax rate

 

 

21.00

%

 

$

4,257

 

 

21.00

%

 

$

4,093

 

Income attributable to non-controlling interests

 

 

(6.88

)%

 

 

(1,393

)

 

(7.07

)%

 

 

(1,378

)

State and local income taxes

 

 

7.58

%

 

 

1,536

 

 

7.74

%

 

 

1,508

 

Permanent items

 

 

0.09

%

 

 

20

 

 

0.21

%

 

 

41

 

Foreign rate differential

 

 

0.20

%

 

 

41

 

 

0.09

%

 

 

17

 

Other

 

 

(0.34

)%

 

 

(71

)

 

(0.22

)%

 

 

(44

)

Change in valuation allowance

 

 

0.85

%

 

 

173

 

 

0.37

%

 

 

73

 

Effective income tax rate

 

 

22.50

%

 

$

4,563

 

 

22.12

%

 

$

4,310

 

 

As of December 31, 2025, the Company had net tax receivables of $1,897 which consisted of net federal and state and local tax of $977 and $920, respectively. As of December 31, 2024, the Company had net tax receivables of $ 1,151 which consisted of net federal and state and local tax receivables of $660 and $491, respectively.

During the year ended December 31, 2025, the Company 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 $598 as of December 31, 2025. The amount of valuation allowance as of December 31, 2024 was $308.

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of December 31, 2025, the Company’s U.S. federal income tax returns for the years 2022 through 2025 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. During the year ending December 31, 2025, the Company has reserved a total of $318 related to unrecognized tax benefits. If recognized, the above tax benefits would reduce the annual effective rate. The Company believes the liability established for unrecognized tax benefits is adequate in relation to the potential for additional assessments. The Company will reassess these amounts annually. The Company did not have any reserve related to unrecognized tax benefits as of December 31, 2024 and 2023.

 

 

As of December 31,

 

 

2025

 

Unrecognized tax benefits - January 1

 

$

—

 

Additions for tax positions of prior years

 

 

318

 

Unrecognized tax benefits - December 31

 

$

318

 

The unrecognized tax benefits are recorded in Deferred tax and other liabilities in the Consolidated Statements of Financial Condition.