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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | 11. INCOME TAXES The components of income (loss) before income taxes are as follows:
| 2019 |  | 2018 |  | 2017
| (in millions)
U.S. loss | $ | (889.0 | ) |  | $ | (549.4 | ) |  | $ | (37.1 | )
Non - U.S. income | 356.0 |  |  | 435.5 |  |  | 377.1 |
Total income (loss) before income taxes | $ | (533.0 | ) |  | $ | (113.9 | ) |  | $ | 340.0 |
The following is a summary of the components of our provision for income taxes:
| 2019 |  | 2018 |  | 2017
| (in millions)
Current |  |  |  |  |
Federal | $ | (11.9 | ) |  | $ | (81.5 | ) |  | $ | 87.1 |
State and local | 0.1 |  |  | 3.2 |  |  | (0.7 | )
Foreign | 49.3 |  |  | 46.5 |  |  | 62.4 |
Total current | $ | 37.5 |  |  | $ | (31.8 | ) |  | $ | 148.8 |
Deferred |  |  |  |  |
Federal | $ | (73.5 | ) |  | $ | (5.1 | ) |  | $ | (122.3 | )
State and local | (1.5 | ) |  | (6.7 | ) |  | (17.0 | )
Foreign | (11.4 | ) |  | (13.5 | ) |  | (7.0 | )
Total deferred | (86.4 | ) |  | (25.3 | ) |  | (146.3 | )
Total income tax expense (benefit) | $ | (48.9 | ) |  | $ | (57.1 | ) |  | $ | 2.5 |
The following is a reconciliation of income taxes calculated at the U.S. federal statutory income tax rate of 21% in 2019 and 2018 and 35% in 2017 to our provision for income taxes:
| 2019 |  | 2018 |  | 2017
Federal statutory | $ | (111.9 | ) |  | $ | (23.9 | ) |  | $ | 119.0 |
Foreign income taxes | (40.2 | ) |  | (39.7 | ) |  | (96.3 | )
Change in enacted tax rate | 0.2 |  |  | (8.3 | ) |  | (107.6 | )
Transition tax | (7.5 | ) |  | 5.8 |  |  | 108.3 |
State and local | (20.0 | ) |  | (12.8 | ) |  | (6.3 | )
Tax credits | (9.6 | ) |  | (20.1 | ) |  | (8.8 | )
Valuation allowance | 12.6 |  |  | 12.9 |  |  | (6.1 | )
Goodwill impairment | 92.4 |  |  | 21.6 |  |  | — |
Withholding taxes | 4.0 |  |  | 6.6 |  |  | 4.7 |
U.S. tax on unremitted foreign earnings | (2.8 | ) |  | 4.1 |  |  | (18.6 | )
Global intangible low-taxed income | 31.1 |  |  | 8.0 |  |  | — |
Uncertain tax positions | 5.9 |  |  | (9.8 | ) |  | 13.5 |
Other | (3.1 | ) |  | (1.5 | ) |  | 0.7 |
Effective income tax expense (benefit) | $ | (48.9 | ) |  | $ | (57.1 | ) |  | $ | 2.5 |
In 2019, our income tax benefit varied from the tax benefit computed at the U.S. federal statutory rate primarily as a result of the goodwill impairment charge, which resulted in no income tax benefit, as well as the incremental tax expense associated with the global intangible low-taxed income inclusion under the Tax Cuts and Jobs Act of 2017 (the 2017 Act), and our inability to realize an income tax benefit for losses incurred in certain foreign and state jurisdictions. These items were partially offset by the impact of favorable foreign tax rates and income tax credits. In addition, as part of the 2017 Act, a one-time transition tax (Transition Tax) was imposed on certain foreign earnings for which U.S. income tax was previously deferred. The Department of Treasury and Internal Revenue Service issued final regulations on February 5, 2019 regarding the Transition Tax, which changed the manner in which we are required to compute the Transition Tax when it is recognized over a two-year period. The application of the final regulations resulted in a $9.3 million income tax benefit, which has been recorded in 2019, the period in which the final regulations were issued. In 2018, our income tax benefit varied from the tax benefit computed at the U.S. federal statutory rate, and in 2017 our income tax expense was lower than tax expense computed at the U.S. federal statutory rate, primarily due to the impact of favorable foreign tax rates, and the impact of income tax credits, partially offset by our inability to realize an income tax benefit for losses incurred in certain foreign and state jurisdictions. In addition, during 2018, we finalized an advance pricing agreement in a foreign jurisdiction and settled various other matters, which resulted in an income tax benefit and a reduction of our liability for unrecognized tax benefits and related interest and penalties of approximately $20 million. We also recorded an income tax benefit of approximately $85 million in 2018 as a result of the goodwill impairment charge, partially offset by a discrete tax expense related to the sale of the aftermarket business associated with our former Powertrain segment. In connection with our analysis of the impacts of the 2017 Act, we recorded estimated provisional amounts under SAB 118, resulting in a discrete net tax benefit of approximately $20 million for the year ended December 31, 2017. This net benefit primarily consisted of a benefit of approximately $110 million for the remeasurement of our net deferred tax liabilities as a result of the change in tax rate and a benefit of $18 million related to the reduction of a previously recorded deferred tax liability on certain foreign earnings, partially offset by expense of approximately $108 million related to the Transition Tax. These were provisional amounts at December 31, 2017 under SAB 118 because we had not yet completed our accounting for all of the enactment-date income tax effects of the 2017 Act. As of December 31, 2018, we had completed our accounting for all of the enactment-date income tax effects of the 2017 Act. Upon further analysis of the 2017 Act, and based on notices and regulations issued and proposed by the U.S. Department of Treasury and the Internal Revenue Service, we finalized our calculations of the Transition Tax liability during 2018 and adjusted our December 31, 2017 provisional amount by an additional tax expense of $5.8 million. Also, based on finalizing our calculations during 2018 related to the remeasurement of certain deferred tax assets and liabilities, we adjusted our December 31, 2017 provisional amount by an additional tax benefit of $8.3 million. These adjustments to our provisional amounts resulted in a net income tax benefit of $2.5 million, which is included as a component of Income tax expense (benefit) in our Consolidated Statement of Operations for the year ended December 31, 2018. Also as part of the completion of our SAB 118 analysis, the balance of the 2018 Transition Tax liability was determined to be satisfied with existing U.S. tax attributes resulting in no current income tax payable. Under GAAP, we must make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as global intangible low-taxed income (GILTI) in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as period expense. We have elected to account for GILTI in the year the tax is incurred. As of December 31, 2019, we have refundable income taxes of approximately $25 million classified as Prepaid expenses and other on our Consolidated Balance Sheet, as compared to approximately $10 million as of December 31, 2018. We also have income taxes payable of approximately $3 million and $10 million classified as Accrued expenses and other on our Consolidated Balance Sheets as of December 31, 2019 and 2018, respectively. The approximate tax effect of each significant type of temporary difference and carryforward that results in a deferred tax asset or liability is as follows:
| December 31,
| 2019 |  | 2018
| (in millions)
Deferred tax assets |  |  |
Employee benefits | $ | 149.4 |  |  | $ | 152.9 |
Inventory | 27.3 |  |  | 22.9 |
Net operating loss (NOL) carryforwards | 201.7 |  |  | 166.0 |
Tax credit carryforwards | 47.8 |  |  | 44.3 |
Capital allowance carryforwards | 9.3 |  |  | 10.0 |
Capitalized expenditures | 42.9 |  |  | 25.9 |
Interest carryforward | 43.9 |  |  | — |
Operating lease liabilities | 27.1 |  |  | — |
Other | 42.7 |  |  | 47.3 |
Valuation allowances | (196.0 | ) |  | (183.3 | )
Deferred tax assets | $ | 396.1 |  |  | $ | 286.0 |
Deferred tax liabilities |  |  |
Other intangible assets | (199.7 | ) |  | (176.0 | )
Fixed assets | (120.7 | ) |  | (141.9 | )
Operating lease right-of-use assets | (27.1 | ) |  | — |
Other | (4.1 | ) |  | (15.2 | )
Deferred tax liabilities | $ | (351.6 | ) |  | $ | (333.1 | )
Deferred tax asset (liability), net | $ | 44.5 |  |  | $ | (47.1 | )
Deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
| December 31,
| 2019 |  | 2018
| (in millions)
U.S. federal and state deferred tax asset (liability), net | $ | 5.0 |  |  | $ | (76.6 | )
Other foreign deferred tax asset, net | 39.5 |  |  | 29.5 |
Deferred tax asset (liability), net | $ | 44.5 |  |  | $ | (47.1 | )
DEFERRED INCOME TAX ASSETS AND LIABILITIES AND VALUATION ALLOWANCES The deferred income tax assets and liabilities summarized above reflect the impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities for income tax purposes. ASC 740 - Income Taxes states that companies must measure deferred tax amounts at the rate at which they are expected to be realized. As of December 31, 2019 and December 31, 2018, we had deferred tax assets from domestic and foreign net operating loss and tax credit carryforwards of $258.8 million and $220.3 million, respectively. Approximately $101.5 million of the deferred tax assets at December 31, 2019 relate to NOL and tax credits that can be carried forward indefinitely with the remainder expiring between 2020 and 2039. Accounting guidance for income taxes requires a deferred tax liability to be established for the U.S. tax impact of undistributed earnings of foreign subsidiaries unless it can be shown that these earnings will be permanently reinvested outside the U.S. We have provided deferred income taxes for the estimated U.S. federal income tax, foreign income tax, and applicable withholding taxes on earnings of subsidiaries expected to be distributed. As a result of the enactment of the 2017 Act in the fourth quarter of 2017, we recognized a one-time transition tax expense related to certain foreign earnings for which U.S. tax had been previously deferred, and remeasured our deferred tax liability related to foreign earnings. In general, the 2017 Act allows for a dividends received deduction for the repatriation of foreign earnings to the U.S. and, as such, no additional U.S. federal income tax is expected. In accordance with the accounting guidance for income taxes, we review the likelihood that we will realize the benefit of deferred tax assets and estimate whether recoverability of our deferred tax assets is “more likely than not,” based on forecasts of taxable income in the related tax jurisdictions. In determining the requirement for a valuation allowance, the historical results, projected future operating results based upon approved business plans, eligible carry forward periods, and tax planning opportunities are considered, along with other relevant positive and negative evidence. If, based upon available evidence, it is more likely than not the deferred tax assets will not be realized, a valuation allowance is recorded. During 2019 and 2018, we recorded a net tax expense of $25.4 million and $16.0 million, respectively, resulting from net losses in certain foreign and U.S. state and local jurisdictions with no corresponding tax benefit due to increases in our valuation allowance. This was partially offset by a net tax benefit of $12.8 million and $3.1 million, respectively, resulting from changes in determinations relating to the potential realization of deferred tax assets and the resulting reversal of a valuation allowance in a foreign jurisdiction. As of December 31, 2019 and December 31, 2018, we have a valuation allowance of $196.0 million and $183.3 million, respectively, related to net deferred tax assets in several foreign jurisdictions and U.S. state and local jurisdictions. UNRECOGNIZED INCOME TAX BENEFITS To the extent that we have uncertain tax positions, a determination is made as to whether such positions meet the “more likely than not” threshold. This threshold must be met in order to record any tax benefit and, to the extent that an uncertain tax position meets the "more likely than not" threshold, we have measured and recorded the highest probable benefit, and have established appropriate reserves for benefits that exceed the amount likely to be sustained upon examination. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:
| Unrecognized Income Tax |  | Interest and
| Benefits |  | Penalties
| (in millions)
Balance at January 1, 2017 | $ | 28.2 |  |  | $ | 2.5 |
Increase in prior year tax positions | 1.5 |  |  | 3.1 |
Decrease in prior year tax positions | (0.4 | ) |  | — |
Increase in current year tax positions | 10.5 |  |  | — |
Increase from acquisitions | 8.3 |  |  | 1.9 |
Settlement | (1.2 | ) |  | (0.1 | )
Foreign currency remeasurement adjustment | 0.8 |  |  | 0.1 |
Balance at December 31, 2017 | $ | 47.7 |  |  | $ | 7.5 |
Increase in prior year tax positions | 5.6 |  |  | 3.5 |
Decrease in prior year tax positions | (16.9 | ) |  | (2.5 | )
Increase in current year tax positions | 6.0 |  |  | — |
Settlement | (3.7 | ) |  | (1.6 | )
Balance at December 31, 2018 | $ | 38.7 |  |  | $ | 6.9 |
Increase in prior year tax positions | 0.2 |  |  | 4.5 |
Decrease in prior year tax positions | (3.1 | ) |  | (0.1 | )
Increase in current year tax positions | 4.4 |  |  | — |
Foreign currency remeasurement adjustment | 0.9 |  |  | 0.2 |
Balance at December 31, 2019 | $ | 41.1 |  |  | $ | 11.5 |
At December 31, 2019 and December 31, 2018, we had $41.1 million and $38.7 million of gross unrecognized income tax benefits, respectively. In 2019, 2018, and 2017, we recognized expense of $4.4 million, $1.0 million and $3.1 million, respectively, related to interest and penalties in Income tax expense (benefit) on our Consolidated Statements of Operations. We have a liability of $11.5 million and $6.9 million related to the estimated future payment of interest and penalties at December 31, 2019 and 2018, respectively. The amount of the unrecognized income tax benefits, including interest and penalties, as of December 31, 2019 that, if recognized, would affect the effective tax rate is $49.4 million. We operate in multiple jurisdictions throughout the world and the income tax returns of several subsidiaries in various tax jurisdictions are currently under examination. We are currently under a U.S. federal income tax examination for the years 2015 through 2017. Generally, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2013. During the next 12 months, we may finalize another advance pricing agreement in a foreign jurisdiction, which would 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. Although it is difficult to estimate with certainty the amount of any audit settlement, we do not expect any potential settlement to be materially different from what we have recorded in unrecognized tax benefits. Based on the status of ongoing tax audits, and the protocol of finalizing audits by the relevant tax authorities, it is not possible to estimate the impact of changes, if any, to previously recorded uncertain tax positions. We will continue to monitor the progress and conclusions of all ongoing audits and other communications with tax authorities and will adjust our estimated liability as necessary.

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- 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
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