Marcus & Millichap, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

Income Taxes

3 Months Ended

Mar. 31, 2021

11.	Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2021 and 2020 was 28.8% and 31.2%, respectively. The Company provides for the effects of income taxes in interim financial statements based on the Company’s estimate of its annual effective tax rate for the full year, which is based on forecasted income by jurisdiction where the Company operates, adjusted for any tax effects of items that relate discretely to the period, if any.

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


	Three Months Ended March 31,
	2021						2020
	Amount			Rate			Amount			Rate
Income tax expense at the federal statutory rate	$	4,431			21.0	%	$	3,987			21.0	%
State income tax expense, net of federal benefit		1,048			5.0	%		1,018			5.4	%
Windfall tax benefits, net related to stock-based compensation		(27	)		(0.1	)%		(17	)		(0.1	)%
Change in valuation allowance		180			0.9	%		367			1.9	%
Permanent and other items (1)		454			2.0	%		562			3.0	%

	$	6,086			28.8	%	$	5,917			31.2	%

(1)	Permanent items relate principally to compensation charges, qualified transportation fringe benefits and meals and entertainment.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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