XML 29 R19.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 9 Months Ended
--- | ---
Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] |
12. | INCOME TAXES
Tax Provision for the Three and Nine Months Ended September 30, 2018 and 2017 We adjust our effective tax rate each quarter based on our estimated annual effective tax rate. We also record the tax impact of certain discrete, unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections. Income tax expense was $11.5 million for the three months ended September 30, 2018, an effective income tax rate of 15.2%, as compared to $5.7 million for the three months ended September 30, 2017, an effective income tax rate of 6.2%. Income tax expense was $31.4 million for the nine months ended September 30, 2018, an effective income tax rate of 9.3%, as compared to $15.6 million for the nine months ended September 30, 2017, an effective income tax rate of 6.3%. The current year income tax expense for both the three and nine month periods ended September 30, 2018 reflect the reduction in the U.S. statutory tax rate and other U.S. tax law changes as a result of the 2017 Act (defined below). Our effective income tax rate for the three months ended September 30, 2018, is higher than our effective income tax rate for the three months ended September 30, 2017, as a result of a decrease in the proportionate share of income from lower tax rate jurisdictions, as well as an income tax benefit recorded in the third quarter of 2017 related to the re-evaluation of certain valuation allowance positions subsequent to the acquisition of MPG. Our effective income tax rate for the nine months ended September 30, 2018, is higher than our effective income tax rate for the nine months ended September 30, 2017, for the reasons stated above related to the three month period ended September 30, 2018, as well as a discrete tax expense related to the sale of the aftermarket business associated with our Powertrain segment. This was partially offset by a $20.0 million discrete tax benefit associated with the reduction of our liability for unrecognized tax benefits as described below. For the three and nine months ended September 30, 2018 and 2017, our effective income tax rates vary from the U.S. federal statutory rates of 21% and 35%, respectively, primarily due to favorable foreign tax rates, and tax credits, as well as the effect of the items noted above. We operate in multiple jurisdictions throughout the world and the income tax returns of several subsidiaries in various tax jurisdictions are currently under examination. Based on the protocol of finalizing audits and advance pricing agreements with the relevant tax authorities, it is not possible to estimate the timing or impact of changes, if any, to previously recorded uncertain tax positions. As of September 30, 2018 and December 31, 2017, we have recorded a liability for unrecognized income tax benefits and related interest and penalties of $36.3 million and $55.2 million, respectively. In the first nine months of 2018, we finalized an advance pricing agreement in a foreign jurisdiction, which resulted in a reduction of our liability for unrecognized tax benefits and related interest and penalties of $20.0 million. During the next 12 months, we may finalize another advance pricing agreement in a foreign jurisdiction, which could result in a cash payment to the relevant tax authorities and a reduction of our liability for unrecognized tax benefits and related interest and penalties. We do not expect any potential settlement to be materially different from what we have recorded in unrecognized tax benefits. We will continue to monitor the progress and conclusions of current and future audits and other communications with tax authorities and will adjust our estimated liability as necessary. Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act (the 2017 Act) was enacted in the United States. The following is a summary of the key provisions of the 2017 Act: •Reduces the U.S. federal statutory income tax rate for corporations from 35% to 21%
• | Requires companies to pay a one-time transition tax (Transition Tax) on certain foreign earnings for which U.S. income tax was previously deferred
• | Generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries
• | Requires a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations (GILTI)
• | Creates a new limitation on deductible net interest expense incurred by U.S. corporations
• | Allows for immediate expensing of certain capital investments in the U.S. for the period September 27, 2017 through December 31, 2022
• | Creates a new base erosion anti-abuse minimum tax (BEAT)
• | Allows for a current deduction for a portion of foreign derived intangible income (FDII)
Following the enactment of the 2017 Act, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) 118 to provide guidance on the accounting and reporting impacts of the 2017 Act. For the impact of changes resulting from the 2017 Act, under the guidance in SAB 118, we either 1) recorded an estimated provisional amount when the impact of the change could be reasonably estimated; or 2) continued to apply the accounting guidance that was in effect immediately prior to the 2017 Act when the impact of the change could not be reasonably estimated. As of December 31, 2017, we had not yet completed our accounting for the tax effects of the 2017 Act. In March 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-05, Income Taxes - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The guidance provides for a provisional one-year measurement period for entities to finalize their accounting for certain tax effects related to the 2017 Act. We expect to finalize the provisional amounts in the fourth quarter of 2018. As of September 30, 2018, we estimated our annual effective tax rate for the full year 2018. We will continue to examine the potential impact of certain provisions of the 2017 Act that could affect our 2018 effective tax rate, including the provisions related to global intangible low-taxed income (GILTI), foreign derived intangible income (FDII), and the base erosion and anti-abuse tax (BEAT). We continue to evaluate the GILTI tax rules and have not yet adopted our policy to account for the related impacts.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration