The ONE Group Hospitality, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of components of loss before income taxes

The components of income (loss) from continuing operations before provision for income taxes for the periods were as follows (in thousands):

	For the years ended December 31,
	2018		2017
Domestic	$	2,089	$	(6,532	)
Foreign		2,531		2,707
Total	$	4,620	$	(3,825	)

Schedule of components of income tax provision

The components of the Company’s provision for income taxes were as follows (in thousands):

	For the years ended December 31,
	2018		2017
Current:
Federal	$	—	$	—
State and local		52		38
Foreign		630		580
Total current provision for income taxes		682		618
Deferred:
Federal		—		—
State and local		—		—
Foreign		31		(18	)
Total deferred provision for income taxes		31		(18	)
Total provision for income taxes	$	713	$	600

Schedule of effective tax rate differs from the statutory rates

The Company’s effective tax rate differs from the statutory rates as follows:

	For the years ended December 31,
	2018			2017
Income tax benefit at federal statutory rate		21.0	%		34.0	%
State and local taxes – current		0.9	%		(0.6	)%
State and local taxes – deferred		10.3	%		13.4	%
FICA tip credit		(17.1	)%		16.9	%
Foreign rate differential		0.3	%		8.6	%
Change in valuation allowance		(15.5	)%		(87.4	)%
Global intangible low-taxed income (“GILTI”)		9.2	%		—	%
Other items, net		6.3	%		(0.6	)%
Total income tax expense		15.4	%		(15.7	)%

Schedule of income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities

The income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows (in thousands):

	For the years ended December 31,
	2018			2017
Deferred tax assets:
Deferred rent liabilities	$	2,524		$	2,637
Lease incentives		1,577			1,484
Stock compensation		417			458
FICA tip credit carryforward		4,255			3,224
Net operating loss		3,705			5,129
Goodwill		1,652			1,839
Inventory		12			13
Charitable contributions carryforward		39			37
Foreign tax credit carryforward		336			566
Deferred revenue		335			383
State and local tax credit carryforward		445			346
Expenses not deductible until paid		283			—
Total deferred tax assets		15,580			16,116
Deferred tax liabilities:
Depreciation and amortization		(4,031	)		(3,661	)
Basis in LLC interest		(526	)		(592	)
ASC 740-10 liability		(190	)		(233	)
Total deferred tax liabilities		(4,747	)		(4,486	)
Valuation allowance		(10,795	)		(11,561	)
Net deferred tax assets	$	38		$	69

Schedule of activity of uncertain tax positions

The following table summarizes the activity related to the Company’s uncertain tax positions (in thousands):

	For the years ended December 31,
	2018			2017
Balance, beginning of year	$	685		$	674
Increase related to prior period positions		—			—
Increase related to current year positions		219			203
Decrease related to prior period positions		(97	)		(192	)
Balance, end of year	$	807		$	685