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, 2023

Schedule of components of income before provision for income taxes

The components of income before provision for income taxes were as follows (in thousands):


	For the years ended December 31,
	2023		2022
Domestic	$	2,077	$	14,051
Foreign		189		142
Total	$	2,266	$	14,193

Schedule of components of provision for income taxes

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


	For the years ended December 31,
	2023		2022
Current:
Federal	$	—	$	—
State and local		638		808
Foreign		35		75
Total current		673		883
Deferred:
Federal		(2,550)		(429)
State and local		117		420
Foreign				—
Total deferred		(2,433)		(9)
Total provision for income taxes	$	(1,760)	$	874

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,
	2023	2022
Income tax provision at federal statutory rate	21.0%	21.0%
State and local taxes	26.5%	7.6%
FICA tip credit	(151.2)%	(22.5)%
Compensation subject to IRC Section 162(m)	52.3%	8.6%
Equity based compensation	(33.1)%	(9.3)%
Non-controlling interest	6.4%	—%
Other items, net	0.4%	0.8%
Effective income tax rate	(77.7)%	6.2%

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,
	2023		2022
Deferred tax assets:
Operating lease liabilities	$	23,798	$	18,871
Stock compensation		371		415
FICA tip credit carryforward		18,312		13,976
Net operating loss		5,543		3,203
Goodwill		753		906
Inventory		52		20
Charitable contributions carryforward		26		3
Foreign tax credit carryforward		622		622
Deferred revenue		126		190
State and local tax credit carryforward		78		135
Expenses not deductible until paid		83		298
IRC 163(j) disallowed interest carryforward		2,152		483
Debt issuance costs		82		113
Kona Grill related acquisition costs		693		755
Total deferred tax assets		52,691		39,990
Deferred tax liabilities:
Operating lease right-of-use assets		(17,360)		(13,974)
Depreciation and amortization		(19,888)		(13,064)
Other		(64)		(7)
Total deferred tax liabilities		(37,312)		(27,045)
Valuation allowance		(622)		(622)
Net deferred tax assets	$	14,757	$	12,323

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,
	2023		2022
Balance, beginning of year	$	46	$	447
Increase related to current year positions		—		—
Decrease related to prior period positions		(46)		(401)
Balance, end of year	$	—	$	46