Perella Weinberg PartnersPWP
Perella Weinberg Partners Income Taxes Disclosure
Note 9—Income Taxes
The Company’s operations are generally composed 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 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, or “UBT”). These taxes have been reflected in the Company’s consolidated financial statements and allocated between the Company and the non-controlling interest holders. 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 PWP OpCo.
The Company’s income (loss) before income taxes is associated with activities in domestic and international jurisdictions, as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Domestic | $ | 37,060 | $ | (78,113) | $ | (104,348) | |||||||||||
International | 14,455 | 9,858 | (8,472) | ||||||||||||||
Income (loss) before income taxes | $ | 51,515 | $ | (68,255) | $ | (112,820) | |||||||||||
The components of Income tax expense (benefit) consist of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
Federal income tax | $ | (3,675) | $ | 20,220 | $ | 433 | |||||||||||
State and local income tax | 851 | 5,113 | 2,955 | ||||||||||||||
Foreign income tax | 3,883 | (1,788) | (2,298) | ||||||||||||||
Total current income tax expense (benefit) | 1,059 | 23,545 | 1,090 | ||||||||||||||
| Deferred | |||||||||||||||||
Federal income tax | 1,035 | (4,088) | 1,819 | ||||||||||||||
State and local income tax | 2,153 | 246 | (2,157) | ||||||||||||||
Foreign income tax | (735) | 1,386 | (1,732) | ||||||||||||||
Total deferred income tax expense (benefit) | 2,453 | (2,456) | (2,070) | ||||||||||||||
Income tax expense (benefit) | $ | 3,512 | $ | 21,089 | $ | (980) | |||||||||||
The following table reconciles the U.S. federal statutory tax rate to the effective income tax rate:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||
U.S. federal statutory tax rate | 10,818 | 21.0 | % | (14,334) | 21.0 | % | (23,692) | 21.0 | % | ||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect(1) | 3,040 | 5.9 | % | 4,612 | (6.8) | % | 475 | (0.4) | % | ||||||||||||||||||||||||||
Foreign tax effects | |||||||||||||||||||||||||||||||||||
| United Kingdom | |||||||||||||||||||||||||||||||||||
Share-based payment awards | (1,741) | (3.4) | % | (1,203) | 1.8 | % | 167 | (0.1) | % | ||||||||||||||||||||||||||
| Other | 470 | 0.9 | % | 313 | (0.5) | % | (983) | 0.9 | % | ||||||||||||||||||||||||||
| France | |||||||||||||||||||||||||||||||||||
Share-based payment awards | 552 | 1.1 | % | (896) | 1.3 | % | 492 | (0.4) | % | ||||||||||||||||||||||||||
Anti-hybrid mismatch rules | (788) | (1.5) | % | 569 | (0.8) | % | 483 | (0.4) | % | ||||||||||||||||||||||||||
| Other | 117 | 0.2 | % | 227 | (0.3) | % | (458) | 0.4 | % | ||||||||||||||||||||||||||
| Germany | |||||||||||||||||||||||||||||||||||
Trade taxes | 726 | 1.4 | % | (92) | 0.1 | % | 105 | (0.1) | % | ||||||||||||||||||||||||||
| Other | (517) | (1.0) | % | (76) | 0.1 | % | 67 | (0.1) | % | ||||||||||||||||||||||||||
Other foreign jurisdictions | 110 | 0.2 | % | 124 | (0.2) | % | 277 | (0.2) | % | ||||||||||||||||||||||||||
Effect of cross-border tax laws | |||||||||||||||||||||||||||||||||||
Branch income | 1,721 | 3.3 | % | 1,879 | (2.8) | % | (928) | 0.8 | % | ||||||||||||||||||||||||||
Changes in valuation allowances | 1,347 | 2.6 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
Excess tax benefit on share-based payments | (14,545) | (28.2) | % | (8,812) | 12.9 | % | 251 | (0.2) | % | ||||||||||||||||||||||||||
Non-deductible compensation expense | 3,436 | 6.7 | % | 35,246 | (51.6) | % | 11,726 | (10.4) | % | ||||||||||||||||||||||||||
(Income) loss allocated to non-controlling interests | (1,888) | (3.7) | % | 3,697 | (5.4) | % | 11,991 | (10.6) | % | ||||||||||||||||||||||||||
Meals and entertainment | 713 | 1.4 | % | 794 | (1.2) | % | 389 | (0.3) | % | ||||||||||||||||||||||||||
Changes in unrecognized tax benefits | 448 | 0.9 | % | (1,581) | 2.3 | % | (2,003) | 1.8 | % | ||||||||||||||||||||||||||
Other adjustments | (507) | (1.0) | % | 622 | (0.8) | % | 661 | (0.8) | % | ||||||||||||||||||||||||||
Effective tax rate | $ | 3,512 | 6.8 | % | $ | 21,089 | (30.9) | % | $ | (980) | 0.9 | % | |||||||||||||||||||||||
(1)State and local income taxes in California, New York and New York City for the years ended December 31, 2025, 2024, and 2023 made up the majority (greater than 50%) of the tax effect in this category.
The Company’s overall effective income tax rate is dependent on many factors, including the amount of income subject to tax. Consequently, the effective income tax rate can vary from period to period.
Current tax receivables and payables are included in Prepaid expenses and other assets and Accounts payable, accrued expenses and other liabilities, respectively, on the Consolidated Statements of Financial Condition.
A reconciliation of the total income taxes paid for the years ended December 31, 2025, 2024, and 2023 is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
U.S. federal | $ | 8,248 | $ | 6,652 | $ | — | |||||||||||
U.S. state and local | |||||||||||||||||
| New York State | 441 | 194 | — | ||||||||||||||
| New York City | 1,382 | 927 | 1,030 | ||||||||||||||
| California | 423 | 646 | — | ||||||||||||||
| Texas | 453 | 401 | — | ||||||||||||||
| Other | 444 | 79 | 371 | ||||||||||||||
| Total state and local | $ | 3,143 | $ | 2,247 | $ | 1,401 | |||||||||||
| Foreign | |||||||||||||||||
| United Kingdom | $ | — | $ | (312) | $ | 950 | |||||||||||
| France | 78 | 11 | (6) | ||||||||||||||
| Germany | (680) | 476 | 533 | ||||||||||||||
| Germany - Trade Tax | (875) | 516 | 581 | ||||||||||||||
| Canada | (675) | 693 | 1,109 | ||||||||||||||
| Total foreign | $ | (2,152) | $ | 1,384 | $ | 3,167 | |||||||||||
| Total income taxes paid | $ | 9,239 | $ | 10,283 | $ | 4,568 | |||||||||||
Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount on 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:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax asset | |||||||||||
| Step-up in tax basis in PWP OpCo assets | $ | 101,731 | $ | 71,626 | |||||||
Operating lease liabilities | 42,559 | 40,066 | |||||||||
| RSU amortization | 27,749 | 22,740 | |||||||||
Deferred compensation | 1,428 | 646 | |||||||||
Other | 6,052 | 3,835 | |||||||||
Deferred tax assets before valuation allowance | 179,519 | 138,913 | |||||||||
Valuation allowance | (3,563) | (2,049) | |||||||||
Total deferred tax assets | 175,956 | 136,864 | |||||||||
| Deferred tax liability | |||||||||||
Operating right-of-use lease assets | (33,655) | (31,639) | |||||||||
| Intangible assets | (1,111) | (1,694) | |||||||||
| Fixed assets | (8,183) | (8,614) | |||||||||
| Anticipatory foreign tax credit | (2,850) | (1,979) | |||||||||
Other | (1,104) | (570) | |||||||||
Total deferred tax liabilities | (46,903) | (44,496) | |||||||||
Deferred tax asset, net(1) | $ | 129,053 | $ | 92,368 | |||||||
__________________
(1)Pursuant to the netting requirements of ASC 740, $0.5 million and $0.6 million of deferred tax liabilities are presented within Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition as of December 31, 2025 and 2024.
As of December 31, 2025 the Company has a foreign tax credit carryforward of $0.6 million which expires in 2035 and New York City UBT credits of $1.9 million which expire between 2028 and 2032.
The Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. ASC Topic 740 requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. As of December 31, 2025 and 2024, the Company recognized a valuation allowance of $3.6 million and $2.0 million, respectively, related to certain deferred tax assets that the Company does not expect to realize, a majority of which is attributable to the New York City UBT credits. No deferred tax asset has been recorded for the excess tax over book outside basis difference related to the Company’s investment in PWP OpCo as the deferred tax asset is not expected to reverse. The Company believes it is more-likely-than-not that the remaining net deferred tax asset recorded as of December 31, 2025 will be recovered in the future based on all available positive and negative evidence.
For the years ended December 31, 2025, 2024, and 2023, the Company recorded an increase to the deferred tax asset of $35.8 million, $42.3 million, and $9.9 million, respectively, related to the step-up in tax basis of PWP OpCo assets in connection with the exchanges of PWP OpCo units for cash or stock of the Company during the year. In connection with the step-up in tax basis generated from the exchanges, the Company increased the Amount due pursuant to tax receivable agreement on the Consolidated Statements of Financial Condition by $30.5 million, $35.7 million, and $8.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. The remaining tax benefit is allocable to the Company and is recorded within additional paid-in-capital.
The Company does not have excess book over tax basis in its foreign investments and has therefore not provided a deferred tax liability with respect to an outside basis difference in its investment in foreign subsidiaries.
A reconciliation of the changes in tax positions for the years ended December 31, 2025, 2024, and 2023 is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning unrecognized tax benefit | $ | 2,184 | $ | 3,704 | $ | 5,628 | |||||||||||
| Additions for tax positions of prior years | 216 | 241 | 366 | ||||||||||||||
| Reductions for tax positions of prior years | — | (3,308) | (2,944) | ||||||||||||||
| Additions for tax positions of current year | 1,034 | 1,681 | 506 | ||||||||||||||
| Foreign currency translation | 224 | (134) | 148 | ||||||||||||||
| Ending unrecognized tax benefit | $ | 3,658 | $ | 2,184 | $ | 3,704 | |||||||||||
The Company classifies interest relating to tax matters and tax penalties as components of Income tax expense (benefit) on its Consolidated Statements of Operations. As of December 31, 2025, 2024, and 2023, there were $3.0 million, $1.0 million, and $2.8 million, respectively, of unrecognized tax benefits that, if recognized, would affect the effective income tax rate. For the years ended December 31, 2025, 2024, and 2023, $0.5 million, $0.3 million, and $0.4 million, respectively, of interest and penalties were recognized with respect to unrecognized tax benefits.
The Company is subject to taxation in the United States and various state, local and foreign jurisdictions. As of December 31, 2025, the Company is not subject to examination by the tax authorities in these jurisdictions for years before 2018.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 15, 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.