NEWMARK GROUP, INC.NMRK
NEWMARK GROUP, INC. Income Taxes Disclosure
Income Taxes
The accompanying consolidated financial statements include U.S. federal, state and local income taxes on Newmark’s allocable share of its U.S. results of operations, as well as taxes payable to jurisdictions outside the U.S. In addition, certain of Newmark’s entities are taxed as U.S. partnerships and are subject to primarily the UBT in New York City. Therefore, the tax liability or benefit related to the partnership income or loss, except for the UBT, rests with the partners, rather than the partnership entity (see Note 2 — “Limited Partnership Interests in Newmark Holdings and BGC Holdings” for a discussion of partnership interests). Income taxes are accounted for using the asset and liability method, as prescribed in U.S. GAAP guidance for Income Taxes. The provision for income taxes consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 22,931 | $ | 28,317 | $ | 38,954 | |||||||||||
| U.S. state and local | 9,748 | 11,634 | 21,394 | ||||||||||||||
| Foreign | 10,343 | 3,881 | 1,044 | ||||||||||||||
| UBT | 1,714 | 2,466 | 5,161 | ||||||||||||||
| Total | $ | 44,736 | $ | 46,298 | $ | 66,553 | |||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | 2,660 | (2,592) | (18,165) | ||||||||||||||
| U.S. state and local | 222 | (2,074) | (5,974) | ||||||||||||||
| Foreign | (2,275) | (91) | (131) | ||||||||||||||
| UBT | 440 | (438) | (229) | ||||||||||||||
| Total | $ | 1,047 | $ | (5,195) | $ | (24,499) | |||||||||||
| Provision for income taxes | $ | 45,783 | $ | 41,103 | $ | 42,054 | |||||||||||
Newmark had pre-tax income of $131.3 million, $103.5 million and $154.6 million for the years ended December 31, 2024, 2023 and 2022, respectively. Newmark had pre-tax income/(loss) from foreign operations of $(14.3) million, $(8.4) million and $(37.5) million for the years ended December 31, 2024, 2023 and 2022, respectively.
Differences between Newmark’s actual income tax expense and the amount calculated utilizing the U.S. federal statutory rates were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Tax expense at federal statutory rate | $ | 27,567 | $ | 21,728 | $ | 32,467 | |||||||||||
| Non-controlling interest | (10,246) | (5,909) | (11,054) | ||||||||||||||
| Incremental impact of foreign taxes compared to the federal rate | (3,723) | (2,127) | (270) | ||||||||||||||
| Other permanent differences | 2,602 | (829) | (3,182) | ||||||||||||||
| U.S. state and local taxes, net of U.S. federal benefit | 6,098 | 5,872 | 4,258 | ||||||||||||||
| New York City UBT | 1,762 | 1,041 | 1,045 | ||||||||||||||
| Section 162(m) compensation deduction limitation | 8,149 | 5,806 | 1,519 | ||||||||||||||
| Revaluation of deferred taxes related to ownership changes | 2,134 | 2,752 | 5,641 | ||||||||||||||
| Other rate change | 581 | (1,408) | (594) | ||||||||||||||
| Valuation allowance | 7,904 | 6,881 | 9,985 | ||||||||||||||
| Prior year true ups | 3,901 | 7,439 | 3,232 | ||||||||||||||
| Windfall Tax Benefit | (4,201) | 828 | (2,088) | ||||||||||||||
| Uncertain Tax Positions | 3,468 | — | — | ||||||||||||||
| Other | (213) | (971) | 1,095 | ||||||||||||||
| Provision for income tax | $ | 45,783 | $ | 41,103 | $ | 42,054 | |||||||||||
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is deemed more likely than not that those assets will not be realized.
Significant components of Newmark’s deferred tax asset and liability consisted of the following (in thousands):
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Deferred tax asset | |||||||||||
| Basis difference of investments | $ | 36,266 | $ | 42,734 | |||||||
| Deferred compensation | 130,510 | 125,304 | |||||||||
| Other deferred and accrued expenses | 11,576 | 15,944 | |||||||||
Net operating loss and credit carry-forwards | 37,599 | 22,379 | |||||||||
Other | 1,238 | — | |||||||||
| Total deferred tax asset | 217,189 | 206,361 | |||||||||
| Valuation Allowance | (38,261) | (25,385) | |||||||||
| Deferred tax asset, net of allowance | $ | 178,928 | $ | 180,976 | |||||||
| Deferred tax liability | |||||||||||
| Depreciation and amortization | 80,016 | 77,469 | |||||||||
| Other | — | 3,278 | |||||||||
Deferred tax liability(1) | $ | 80,016 | $ | 80,747 | |||||||
| Net deferred tax asset | $ | 98,912 | $ | 100,229 | |||||||
(1)Before netting within tax jurisdictions.
Newmark has NOLs in non-U.S. jurisdictions of an approximate tax effected value of $36.9 million, of which $30.4 million has an indefinite life. The rest of the $6.5 million primarily consists of the Canada NOL which has a 20 year life. Management assesses the available positive and negative evidence to determine whether existing deferred tax assets will be realized. Accordingly, substantially all of the total valuation allowance of $38.3 million relates to certain NOLs in non-U.S. jurisdictions. Newmark’s net deferred tax asset and liability are included on the accompanying consolidated balance sheets as components of “Other assets” and “Other liabilities,” respectively.
The Company files income tax returns in the United States federal jurisdiction and various states, local and foreign jurisdictions. The Company is currently open to examination by tax authorities in United States federal, state and local jurisdictions and certain non-U.S. jurisdictions for tax years beginning 2021, 2018 and 2021, respectively.
The Company has elected to treat taxes associated with the Global Intangible Low-Taxed Income (GILTI) provision using the Period Cost Method and thus has not recorded deferred taxes for basis differences under this regime as of December 31, 2024.
Pursuant to U.S. GAAP guidance on Accounting for Uncertainty in Income Taxes, Newmark provides for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.
A reconciliation of the beginning to the ending amounts of gross unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022 is as follows (in thousands):
| Balance, January 1, 2022 | $ | — | |||
| Balance, December 31, 2022 | $ | — | |||
| Balance, December 31, 2023 | — | ||||
Increases related to current year | 2,577 | ||||
| Balance, December 31, 2024 | $ | 2,577 | |||
As of December 31, 2024, the Company’s unrecognized tax benefits, excluding interest and penalties, were $2.6 million, of which $2.6 million, if recognized, would affect the effective tax rate. The Company does not believe that the amounts of unrecognized tax benefits will materially change over the next 12 months.
Newmark recognizes interest and penalties related to income tax matters in “Provision for income taxes” on the accompanying consolidated statements of operations. As of December 31, 2024, Newmark had accrued $0.9 million for income tax-related interest and penalties of which $0.9 million was accrued during 2024.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 3, 2025 | Showing above |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 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.