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, 2019

Schedule of components of income before (benefit) provision for income taxes

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


	For the years ended December 31,
	2019		2018
Domestic	$	7,780	$	2,089
Foreign		2,199		2,531
Total	$	9,979	$	4,620

Schedule of components of (benefit) provision for income taxes

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


	For the years ended December 31,
	2019		2018
Current:
Federal	$	—	$	—
State and local		109		52
Foreign		546		630
Total current provision for income taxes		655		682
Deferred:
Federal		(9,242)		—
State and local		(2,600)		—
Foreign		33		31
Total deferred provision for income taxes		(11,809)		31
Total provision for income taxes	$	(11,154)	$	713

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,
	2019	2018
Income tax benefit at federal statutory rate	21.0 %	21.0 %
State and local taxes	0.6 %	11.2 %
FICA tip credit	(10.5)%	(17.1)%
Foreign rate differential	(0.8)%	0.3 %
Change in valuation allowance	(103.0)%	(15.5)%
Global intangible low-taxed income (“GILTI”)	3.9 %	9.2 %
Bargain purchase gain	(23.1)%	—%
Other items, net	0.1 %	6.3 %
Total income tax expense	(111.8)%	15.4 %

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,
	2019		2018
Deferred tax assets:
Deferred rent liabilities	$	2,502	$	2,524
Lease incentives		2,088		1,577
Stock compensation		401		417
FICA tip credit carryforward		5,575		4,255
Net operating loss		3,496		3,705
Goodwill		1,427		1,652
Inventory		6		12
Charitable contributions carryforward		—		39
Foreign tax credit carryforward		510		336
Deferred revenue		373		335
State and local tax credit carryforward		420		445
Expenses not deductible until paid		306		283
Basis in LLC interest		173		—
Total deferred tax assets		17,277		15,580
Deferred tax liabilities:
Depreciation and amortization		(8,835)		(4,031)
Basis in LLC interest		—		(526)
ASC 740‑10 liability		(181)		(190)
Total deferred tax liabilities		(9,016)		(4,747)
Valuation allowance		(510)		(10,795)
Net deferred tax assets	$	7,751	$	38

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,
	2019		2018
Balance, beginning of year	$	807	$	685
Increase related to current year positions		209		219
Decrease related to prior period positions		(202)		(97)
Balance, end of year	$	814	$	807