Moelis & Co Income Taxes Disclosure
The following table presents the U.S. and non‑U.S. components of income (loss) before income tax expense:
|
|
For the Year Ended December 31, |
|||||||
|
|
2025 |
|
2024 |
|
2023 |
|||
U.S. |
|
$ |
336,420 |
|
$ |
185,957 |
|
$ |
(24,267) |
Non-U.S. |
|
|
(8,949) |
|
|
10,055 |
|
|
(4,880) |
Income (loss) before income taxes |
|
$ |
327,471 |
|
$ |
196,012 |
|
$ |
(29,147) |
The current and deferred components of the income tax provision for the years ended December 31, 2025, 2024 and 2023 are as follows:
|
|
For the Year Ended December 31, |
|||||||
|
|
2025 |
|
2024 |
|
2023 |
|||
Current income taxes: |
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
12,243 |
|
$ |
1,055 |
|
$ |
1,425 |
State and Local |
|
|
4,507 |
|
|
3,565 |
|
|
(183) |
Foreign |
|
|
1,075 |
|
|
4,833 |
|
|
1,419 |
|
|
|
|
|
|
|
|
|
|
Deferred income taxes: |
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
44,218 |
|
$ |
34,473 |
|
$ |
(2,471) |
State and Local |
|
|
8,058 |
|
|
5,673 |
|
|
(125) |
Foreign |
|
|
(2,247) |
|
|
(5,078) |
|
|
(1,696) |
Total |
|
$ |
67,854 |
|
$ |
44,521 |
|
$ |
(1,631) |
The following table is a reconciliation of the U.S. federal statutory rate of 21.0% to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"):
|
|
For the Year Ended December 31, 2025 |
||||
|
|
Amount |
|
Percent |
||
Reconciliation of federal statutory tax rate |
|
|
|
|
|
|
|
$ |
68,769 |
|
21.0 |
% |
|
State and local income taxes, net of federal income tax effect (1) |
|
|
9,926 |
|
3.0 |
% |
Rate benefit as a U.S. limited partnership/flow through |
|
|
(5,567) |
|
-1.7 |
% |
Nontaxable or non-deductible items |
|
|
|
|
|
|
Shared-based payment awards |
|
|
(6,431) |
|
-2.0 |
% |
IRC Section 162(m) non-deductible compensation |
|
|
4,205 |
|
1.3 |
% |
Other non-deductible expenses |
|
|
2,171 |
|
0.7 |
% |
Foreign tax effects |
|
|
1,109 |
|
0.4 |
% |
Effect of cross-border tax laws |
|
|
(4,477) |
|
-1.4 |
% |
Change in valuation allowance |
|
|
(1,307) |
|
-0.4 |
% |
Other |
|
|
(544) |
|
-0.2 |
% |
Effect of change in tax laws or rates enacted in the current period |
|
|
- |
|
- |
% |
Total income tax expense/(benefit) and effective income tax rate |
|
$ |
67,854 |
|
20.7 |
% |
The following table is a reconciliation of the U.S federal statutory rate of 21.0% to the Company’s effective rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09:
|
|
For the Year Ended December 31, |
||||
|
|
2024 |
|
2023 |
||
Reconciliation of federal statutory tax rates |
|
|
|
|
|
|
U.S. statutory tax rate |
|
21.0 |
% |
|
21.0 |
% |
Increase (decrease) due to state and local taxes |
|
4.0 |
% |
|
1.3 |
% |
Rate benefit as a U.S. limited partnership/flow through |
|
-1.7 |
% |
|
-1.8 |
% |
Excess tax benefit from equity compensation delivery |
|
-5.0 |
% |
|
9.2 |
% |
Foreign taxes |
|
0.4 |
% |
|
3.3 |
% |
Non-deductible expenses |
|
3.8 |
% |
|
-20.2 |
% |
Regulatory settlements |
|
0.0 |
% |
|
-6.7 |
% |
Return to provision |
|
0.5 |
% |
|
-4.0 |
% |
Other |
|
-0.3 |
% |
|
3.4 |
% |
Effective income tax rate |
|
22.7 |
% |
|
5.5 |
% |
Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount in the Company’s consolidated statements of financial condition. These temporary differences result in taxable or deductible amounts in future years. The significant components of deferred tax assets and liabilities included on the Company’s consolidated statements of financial condition are as follows:
|
|
For the Year Ended December 31, |
||||
|
|
2025 |
|
2024 |
||
Net operating loss |
|
$ |
25,425 |
|
$ |
35,222 |
Step-up in tax basis in Group LP assets |
|
|
286,428 |
|
|
309,285 |
Deferred compensation |
|
|
81,967 |
|
|
81,564 |
Lease liability |
|
|
61,335 |
|
|
50,922 |
Other |
|
|
3,634 |
|
|
2,319 |
Net deferred tax asset before valuation allowance |
|
|
458,789 |
|
|
479,312 |
Valuation allowance on NOL and other |
|
|
(16,132) |
|
|
(15,475) |
Deferred tax asset |
|
$ |
442,657 |
|
$ |
463,837 |
|
|
|
|
|
|
|
Right-of-use asset |
|
$ |
(49,735) |
|
$ |
(41,012) |
Other |
|
|
(22,237) |
|
|
(12,313) |
Deferred tax liability |
|
$ |
(71,972) |
|
$ |
(53,325) |
|
|
|
|
|
|
|
Net deferred tax asset |
|
$ |
370,685 |
|
$ |
410,512 |
The Company recorded a decrease in the net deferred tax asset of $39,827 for the year ended December 31, 2025, which was primarily attributable to amortization of the tax basis in Group LP assets, partially offset by an increase in the step-up in tax basis in Group LP assets in connection with the exchanges of Group LP partnership units for Class A common stock during 2025.
As of December 31, 2025, the Company had accumulated net operating loss carryforwards related to its operations of approximately $103,083 for which it has recorded a deferred tax asset of $25,425. All of the operating losses and related deferred tax assets have an indefinite life.
The following is a supplemental schedule of cash paid for income taxes (net of refunds):
|
|
For the Year Ended December 31, |
|||||||
|
|
2025 |
|
2024 |
|
2023 |
|||
U.S. Federal |
|
$ |
2,794 |
|
$ |
— |
|
$ |
— |
U.S. States and Local |
|
|
2,790 |
|
|
— |
|
|
— |
Foreign |
|
|
3,716 |
|
|
— |
|
|
— |
Total income taxes paid, net of amount refunded |
|
$ |
9,300 |
|
|
— |
|
|
— |
Cash paid during the period for income taxes (prior to ASU 2023-09) |
|
$ |
— |
|
$ |
2,616 |
|
$ |
(3,625) |
Individual jurisdictions equaling 5% or more of the total income taxes paid (net of refunds) for the year ended December 31, 2025 include U.S. federal tax payments of $2,794. Remaining payments were made to various state, local and foreign jurisdictions that were not significant to the total taxes in our consolidated financial statements.
The Company’s operations are generally comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities generally represent obligations of their interest holders. The Company is subject to certain foreign, state and local entity-level taxes (for example, the New York City Unincorporated Business Tax ("UBT")). In addition, the Company is subject to U.S. corporate federal, state and local income tax on its allocable share of results of operations from Group LP.
The Company’s tax years for 2024, 2023, 2022, and 2020 are generally subject to examination by the tax authorities. Tax examinations are monitored on an ongoing basis and adjustments to tax liabilities are made as appropriate.
The Company has no unrecognized tax benefits for the periods ended December 31, 2025, 2024 and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Mar 14, 2016 | |
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.