Marcus & Millichap, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Components of Income from Continuing Operations before Provision for Income Taxes

The components of income from continuing operations before provision for income taxes consisted of the following (in thousands):


	Years Ended December 31,
	2018			2017			2016
Income (loss) before provision for income taxes:
United States	$	119,446		$	100,031		$	108,797
Foreign		(2,226	)		(805	)		(1,695	)

	$	117,220		$	99,226		$	107,102

Schedule of Provision (Benefit) for Income Taxes

The provision for income taxes consisted of the following (in thousands):


	Years Ended December 31,
	2018			2017			2016
The provision (benefit) for income taxes consisted of the following:
Federal:
Current	$	24,101		$	28,993		$	36,228
Deferred		(268	)		13,249			(337	)

	$	23,833		$	42,242		$	35,891

State:
Current	$	6,004		$	5,883		$	6,700
Deferred		162			(423	)		(146	)

	$	6,166		$	5,460		$	6,554

Foreign:
Current	$	—		$	—		$	—
Deferred		(36	)		—			—

	$	(36	)	$	—		$	—

	$	29,963		$	47,702		$	42,445

Significant Components of Deferred Tax Assets (Liabilities), Net

Significant components of the Company’s deferred tax assets, net consisted of the following (in thousands):


	December 31,
	2018			2017
Deferred Tax Assets:
Accrued expenses and bonuses	$	2,258		$	1,307
Bad debt and other reserves		1,840			1,416
Deferred compensation		13,337			12,693
Stock-based compensation		8,912			9,144
Deferred rent		1,470			1,283
Net operating and capital loss carryforwards		2,335			1,809
Other comprehensive income		330			6
State taxes		11			622
Other		25			—

Deferred tax assets before valuation allowance		30,518			28,280
Valuation allowance		(2,570	)		(1,893	)

Deferred Tax Assets	$	27,948		$	26,387

Deferred Tax Liabilities:
Fixed assets	$	(4,086	)	$	(2,861	)
Prepaid expenses		(789	)		(886	)
Other		(114	)		—

Deferred Tax Liabilities		(4,989	)		(3,747	)

Deferred Tax Assets, Net	$	22,959		$	22,640

Components of Provision for Income Taxes and Income before Provision for Income Taxes

The provision for income taxes differs from the amount computed by applying the statutory federal corporate income tax rate to income before provision for income taxes and consisted of the following (in thousands):


	Years Ended December 31,
	2018						2017						2016
	Amount			Rate			Amount			Rate			Amount			Rate
Income tax expense at the federal statutory rate	$	24,616			21.0	%	$	34,729			35.0	%	$	37,485			35.0	%
State income tax expense, net of federal benefit		4,550			3.9	%		3,577			3.6	%		4,346			4.1	%
Effect of state and foreign rate change on deferred taxes		69			0.1	%		(30	)		—			(79	)		(0.1	)%
Windfall tax benefits, net related to stock-based compensation		(1,535	)		(1.3	)%		(2,568	)		(2.6	)%		—			—
Change in valuation allowance		677			0.6	%		170			0.2	%		412			0.4	%
Effect of rate and other changes on federal deferred taxes, net due to enactment of the Act		—			—			11,644			11.7	%		—			—
Permanent and other items(1)		1,586			1.3	%		180			0.2	%		281			0.2	%

	$	29,963			25.6	%	$	47,702			48.1	%	$	42,445			39.6	%

(1)	Permanent items relate principally to compensation charges and meals and entertainment.

Schedule of Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits consisted of the following (in thousands):


	Years Ended December 31,
	2018		2017		2016
Beginning balance	$	—	$	—	$	—
Gross increase/(decrease) as a result of positions taken:
Prior periods		1,246		—		—
Current period		—		—		—
Settlement with tax authorities		—		—		—
Expiration of applicable statutes of limitation		—		—		—

Ending balance	$	1,246	$	—	$	—