GCM Grosvenor Inc.GCMG

GCM Grosvenor Inc. Income Taxes Disclosure

10-KFiled Feb 19, 20266 min read
Income Taxes
The income (loss) before income taxes for the years ended December 31, 2025, 2024 and 2023 consist of the following U.S. and foreign components:
Year Ended December 31,
202520242023
United States income
$148,316 $44,541 $(27,130)
Foreign income
6,627 5,6235,616
Income (loss) before income taxes
$154,943 $50,164 $(21,514)
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 consist of the following:
Year Ended December 31,
202520242023
Current:
Federal
$4,207 $637 $(282)
State and local(1)
2,675 3,3283,309
Foreign
1,942 1,8341,839
Total current provision for income taxes
$8,824 $5,799 $4,866 
Deferred:
Federal$1,683 $5,945 $3,730 
State and local(1)
2,171 1,293 (886)
Foreign225 523 (18)
Total deferred income taxes expense4,079 7,761 2,826 
Total provision for income taxes
$12,903 $13,560 $7,692 
__________
(1)New York City made up the majority of the tax effect in this category for each of the years ended December 31, 2025, 2024 and 2023.
A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows:
Year Ended December 31,
202520242023
AmountRateAmountRateAmountRate
Statutory U.S. federal income tax rate$32,538 21 %$10,535 21 %$(4,518)21 %
State and local income taxes, net of federal income tax effect4,7263 %3,3297 %2,597(12)%
Foreign tax effect:
Japan
Income tax expense**8322 %929(4)%
Withholding tax**7602 %278(1)%
Other**(77)— %(63)— %
United Kingdom
Income tax expense****307(1)%
Foreign tax credits****(134)1 %
Other foreign jurisdictions1,8401 %4481 %175(1)%
Effect of cross-border tax laws(23)— %(13)— %(52)— %
Change in valuation allowance(326)— %(1,542)(4)%718(4)%
Nontaxable or nondeductible items:
NCI, less tax expense within NCI(20,859)(14)%(4,719)(9)%8,019(37)%
Change in fair value of warrant liabilities (net of NCI)(1,209)(1)%7911 %(68)— %
Tax receivable agreement liability expense(464)— %181— %332(2)%
Other114— %(120)— %(13)— %
Changes in unrecognized tax benefits(551)— %1,0292 %0— %
Other adjustments:
Gain/Loss on Warrants
(3,207)(2)%2,4455 %(220)1 %
Provision-to-return adjustments397— %4— %(336)2 %
Other(73)— %(323)(1)%(259)1 %
Effective income tax rate$12,903 8 %$13,560 27 %$7,692 (36)%
___________
*     Immaterial for period and included in Other foreign jurisdictions.    
For the years ended December 31, 2025, 2024 and 2023, cash tax payments were made in the following jurisdictions:
Year Ended December 31,
202520242023
Federal$1,797 $349 $5 
State and local:Year Ended
New York City2,134 Year Ended 2,360 1,632 
Illinois*Year Ended (266)*
Wisconsin*Year Ended 318 *
Other states626 Year Ended 369 46 
Foreign:Year Ended
Japan1,290 Year Ended 920 1,056 
U.K. 463 Year Ended 513 593 
Hong Kong*Year Ended 316 *
Canada*Year Ended *176 
Other foreign jurisdictions188 Year Ended 137 (62)
Total income taxes paid, net of refunds$6,498 $5,016 $3,446 
___________
*     Immaterial for period and included in Other states or Other foreign jurisdictions.
Details of the Company’s deferred tax assets and liabilities are as follows:
As of December 31,
20252024
Investment in GCMH$127,384 $93,045 
Intangibles and other1,7461,111
Total deferred tax assets before valuation allowance129,130 94,156
Valuation allowance(72,129)(40,869)
Total deferred tax assets$57,001 $53,287 
Right-of-use asset$(512)$(612)
Unrealized gains— (1,558)
Other deferred tax liability(580)(430)
Total deferred tax liabilities(1)
$(1,092)$(2,600)
Deferred tax assets, net(2)
$55,909 $50,687 
___________
(1)     As of December 31, 2025 and 2024, $0.3 million and $2.1 million of deferred tax liabilities, respectively, were offset and presented within deferred tax asset, net in the Consolidated Statements of Financial Condition as these deferred tax assets and liabilities relate to the same jurisdiction.
(2)    As of December 31, 2025 and 2024, $0.8 million and $0.5 million of deferred tax liabilities are presented within accrued expenses and other liabilities in the Consolidated Statements of Financial Condition
The deferred tax assets and liabilities are presented in our Consolidated Statements of Financial Condition as follows:
As of December 31,
20252024
Deferred tax asset, net
$56,711 $51,160 
Deferred tax liability(1)
802473
Total deferred tax asset, net
$55,909 $50,687 
___________
(1)     Deferred tax liabilities are presented within accrued expenses and other liabilities in the Consolidated Statements of Financial Condition
GCMG’s sole material asset is its investment in GCMH, which is treated as a partnership for U.S. federal income tax purposes and for purposes of certain jurisdictional income taxes. GCMH’s net taxable income and any related tax credits are passed through to its partners and are included in the partners’ tax returns, even though such net taxable income or tax credits may not have actually been distributed. While GCMG consolidates GCMH for financial reporting purposes, GCMG will be taxed on its share of earnings of GCMH not attributed to the noncontrolling interest holders, which will continue to bear their share of income tax on allocable earnings of GCMH. The income tax burden on the earnings taxed to the noncontrolling interest holders is not reported by the Company in its consolidated financial statements under GAAP. As a result, the Company’s effective tax rate differs materially from the statutory rate. The primary factors impacting the effective tax rate are the allocation of income (loss) to noncontrolling interest as well as state and foreign income taxes paid at the partnership level that are included in income tax expenses.
GCMG has recorded a valuation allowance of approximately $72.1 million and $40.9 million as of December 31, 2025 and 2024, respectively, an increase of $31.2 million, which is primarily related to its outside partnership basis of its investment in GCMH for the amount of the deferred tax asset that is not expected to be realized.
The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. As of December 31, 2025, tax years for 2025, 2024, 2023, 2022, and 2021 are subject to examination by the tax authorities. With few exceptions, as of December 31, 2025, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before 2021.
For the years ended December 31, 2025, 2024 and 2023, GCMG’s unrecognized tax benefits relating to uncertain tax position, excluding related interest and penalties, consisted of the following:
Year Ended December 31,
202520242023
Unrecognized tax benefits, beginning of period$714 $— $— 
Gross increases in tax positions in prior periods— 714 — 
Gross decreases in tax positions in prior periods(451)— — 
Gross increases in tax positions in current period— — — 
Lapse of statute of limitations
— — — 
Settlements with taxing authorities— — — 
Unrecognized tax benefits, end of period$263 $714 $— 
If the above tax benefits were recognized, the effective income tax rate would be reduced. GCMG recognized interest and penalties accrued related to unrecognized tax benefits as income tax expense. Related to the unrecognized tax benefits, GCMG has accrued interest of $0.2 million and $0.3 million as of December 31, 2025 and 2024, respectively.

Historical Timeline

Fiscal YearFiled
2025Feb 19, 2026Showing above
2024Feb 21, 2025
2023Mar 1, 2024
2022Feb 23, 2023
2021Feb 25, 2022
2020Mar 12, 2021

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

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