The ONE Group Hospitality, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

Schedule of components of income before provision for income taxes

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


	For the years ended December 31,
	2024		2023
Domestic	$	(24,509)	$	2,077
Foreign		22		189
Total	$	(24,487)	$	2,266

Schedule of components of provision for income taxes

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


	For the years ended December 31,
	2024		2023
Current:
Federal	$	66	$	—
State and local		544		638
Foreign		143		35
Total current		753		673
Deferred:
Federal		(7,528)		(2,550)
State and local		(1,059)		117
Foreign		—		—
Total deferred		(8,587)		(2,433)
Total benefit for income taxes	$	(7,834)	$	(1,760)

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,
	2024	2023
Income tax provision at federal statutory rate	21.0%	21.0%
State and local taxes	2.6%	26.5%
FICA tip credit	18.3%	(151.2)%
Compensation subject to IRC Section 162(m)	(3.3)%	52.3%
Equity based compensation	(0.5)%	(33.1)%
Transaction costs	(3.8)%	—%
Non-controlling interest	(0.7)%	6.4%
Other items, net	(1.6)%	0.4%
Effective income tax rate	32.0%	(77.7)%

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,
	2024		2023
Deferred tax assets:
Operating lease liabilities	$	70,807	$	23,798
Stock compensation		361		371
FICA tip credit carryforward		49,407		18,312
Net operating loss		7,324		5,543
Goodwill		589		753
Inventory		101		52
Charitable contributions carryforward		37		26
Foreign tax credit carryforward		622		622
Deferred revenue		1,627		126
State and local tax credit carryforward		21		78
Expenses not deductible until paid		2,961		83
IRC 163(j) disallowed interest carryforward		34,002		2,152
Debt issuance costs		—		82
Kona Grill related acquisition costs		621		693
Total deferred tax assets		168,480		52,691
Deferred tax liabilities:
Operating lease right-of-use assets		(60,600)		(17,360)
Depreciation and amortization		(19,599)		(19,888)
Trademarks and franchise agreements		(30,215)		—
Other		(136)		(64)
Total deferred tax liabilities		(110,550)		(37,312)
Valuation allowance		(4,248)		(622)
Net deferred tax assets	$	53,682	$	14,757

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,
	2024		2023
Balance, beginning of year	$	—	$	46
Increase related to acquisitions		127		—
Decrease related to prior period positions		—		(46)
Balance, end of year	$	127	$	—