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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | 9. INCOME TAXES The components of income (loss) before income taxes are as follows:
| 2020 |  | 2019 |  | 2018
| (in millions)
U.S. loss | $ | (721.6) |  |  | $ | (889.0) |  |  | $ | (549.4) |
Non - U.S. income | 111.3 |  |  | 356.0 |  |  | 435.5 |
Total loss before income taxes | $ | (610.3) |  |  | $ | (533.0) |  |  | $ | (113.9) |
The following is a summary of the components of our provision for income taxes:
| 2020 |  | 2019 |  | 2018
| (in millions)
Current |  |  |  |  |
Federal | $ | 2.0 |  |  | $ | (11.9) |  |  | $ | (81.5) |
State and local | 0.5 |  |  | 0.1 |  |  | 3.2 |
Foreign | 20.2 |  |  | 49.3 |  |  | 46.5 |
Total current | $ | 22.7 |  |  | $ | 37.5 |  |  | $ | (31.8) |
Deferred |  |  |  |  |
Federal | $ | (60.0) |  |  | $ | (73.5) |  |  | $ | (5.1) |
State and local | (0.7) |  |  | (1.5) |  |  | (6.7) |
Foreign | (11.2) |  |  | (11.4) |  |  | (13.5) |
Total deferred | (71.9) |  |  | (86.4) |  |  | (25.3) |
Total income tax benefit | $ | (49.2) |  |  | $ | (48.9) |  |  | $ | (57.1) |
The following is a reconciliation of income taxes calculated at the U.S. federal statutory income tax rate of 21% in 2020, 2019 and 2018 to our provision for income taxes:
| 2020 |  | 2019 |  | 2018
| (in millions)
Federal statutory | $ | (128.2) |  |  | $ | (111.9) |  |  | $ | (23.9) |
Foreign income taxes | (21.5) |  |  | (40.2) |  |  | (39.7) |
Change in enacted tax rate | 2.1 |  |  | 0.2 |  |  | (8.3) |
Transition tax | — |  |  | (7.5) |  |  | 5.8 |
State and local | (5.0) |  |  | (20.0) |  |  | (12.8) |
Tax credits | (9.7) |  |  | (9.6) |  |  | (20.1) |
Valuation allowance | 19.8 |  |  | 12.6 |  |  | 12.9 |
Goodwill impairment | 107.1 |  |  | 92.4 |  |  | 21.6 |
Withholding taxes | 5.6 |  |  | 4.0 |  |  | 6.6 |
U.S. tax on unremitted foreign earnings | — |  |  | (2.8) |  |  | 4.1 |
Tax benefit on loss carryback | (14.4) |  |  | — |  |  | — |
Global intangible low-taxed income | 2.3 |  |  | 31.1 |  |  | 8.0 |
Uncertain tax positions | (8.8) |  |  | 5.9 |  |  | (9.8) |
Other | 1.5 |  |  | (3.1) |  |  | (1.5) |
Effective income tax benefit | $ | (49.2) |  |  | $ | (48.9) |  |  | $ | (57.1) |
In 2020, our effective income tax rate varied from 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 favorable foreign tax rates, the impact of tax credits, and the finalization of an advance pricing agreement in a foreign jurisdiction, which resulted in a tax benefit of approximately $6.8 million. We also recognized a tax benefit of approximately $14.4 million related to our ability to carry back prior year losses, as well as projected current year losses, under the CARES Act to years with the previous 35% tax rate. These income tax benefits were partially offset by our inability to realize an income tax benefit for losses incurred in certain foreign and state jurisdictions, as well as a partial valuation allowance of approximately $5.3 million on certain U.S. federal income tax attributes. 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 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. The 2017 Act subjects a U.S. shareholder to tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. Under GAAP, we made an accounting policy election to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense. As of December 31, 2020, we have refundable income taxes of approximately $14 million classified as Prepaid expenses and other on our Consolidated Balance Sheet, as compared to approximately $25 million as of December 31, 2019. We also have income taxes payable of approximately $6 million and $3 million classified as Accrued expenses and other on our Consolidated Balance Sheets as of December 31, 2020 and 2019, 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,
| 2020 |  | 2019
| (in millions)
Deferred tax assets |  |  |
Employee benefits | $ | 162.4 |  |  | $ | 149.4 |
Inventory | 32.9 |  |  | 27.3 |
Net operating loss (NOL) carryforwards | 221.4 |  |  | 201.7 |
Tax credit carryforwards | 88.6 |  |  | 47.8 |
Capital allowance carryforwards | 10.2 |  |  | 9.3 |
Capitalized expenditures | 45.9 |  |  | 42.9 |
Interest carryforward | 10.4 |  |  | 43.9 |
Operating lease liabilities | 25.7 |  |  | 27.1 |
Other | 50.6 |  |  | 42.7 |
Valuation allowances | (208.0) |  |  | (196.0) |
Deferred tax assets | $ | 440.1 |  |  | $ | 396.1 |
Deferred tax liabilities |  |  |
Other intangible assets | (179.9) |  |  | (199.7) |
Fixed assets | (137.5) |  |  | (120.7) |
Operating lease right-of-use assets | (25.6) |  |  | (27.1) |
Other | (2.5) |  |  | (4.1) |
Deferred tax liabilities | $ | (345.5) |  |  | $ | (351.6) |
Deferred tax assets, net | $ | 94.6 |  |  | $ | 44.5 |
Deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
| December 31,
| 2020 |  | 2019
| (in millions)
U.S. federal and state deferred tax asset, net | $ | 44.1 |  |  | $ | 5.0 |
Other foreign deferred tax asset, net | 50.5 |  |  | 39.5 |
Deferred tax asset, net | $ | 94.6 |  |  | $ | 44.5 |
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, 2020 and December 31, 2019, we had deferred tax assets from domestic and foreign net operating loss and tax credit carryforwards of $320.2 million and $258.8 million, respectively. Approximately $107.7 million of the deferred tax assets at December 31, 2020 relate to NOL and tax credits that can be carried forward indefinitely with the remainder expiring between 2021 and 2040. 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. 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 2020, we determined that a portion of our deferred tax assets related to certain U.S. federal income tax attributes that are being carried forward were not more likely than not to be realized and, as such, we recorded a valuation allowance resulting in tax expense of approximately $5.3 million during the year ended December 31, 2020. Due to the uncertainty associated with the extent and ultimate impact of COVID-19 on global automotive production volumes, we may experience lower than projected earnings in certain jurisdictions in future periods, and it is reasonably possible that changes in valuation allowances could be recognized in the next twelve months as a result. During 2020, 2019 and 2018, we recorded a net tax expense of $14.5 million, $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. These income tax expenses were increased in 2020 and partially offset in 2019 and 2018 by a net tax expense of $5.3 million, and 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, the resulting establishment of a partial valuation allowance in the U.S., and the resulting release of valuation allowances in foreign jurisdictions. As of December 31, 2020 and December 31, 2019, we have a valuation allowance of $208.0 million and $196.0 million, respectively, related to net deferred tax assets in several foreign jurisdictions and U.S. federal, 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, 2018 | $ | 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 |
Increase in prior year tax positions | 0.2 |  |  | — |
Decrease in prior year tax positions | (6.6) |  |  | (1.7) |
Increase in current year tax positions | 0.7 |  |  | — |
Settlement | (12.2) |  |  | (6.3) |
Foreign currency remeasurement adjustment | (3.0) |  |  | (1.5) |
Balance at December 31, 2020 | $ | 20.2 |  |  | $ | 2.0 |
At December 31, 2020 and December 31, 2019, we had $20.2 million and $41.1 million of gross unrecognized income tax benefits, respectively. In 2020, 2019, and 2018, we recognized a tax (benefit)/expense of $(1.7) million, $4.4 million and $1.0 million, respectively, related to interest and penalties in Income tax benefit on our Consolidated Statements of Operations. We have a liability of $2.0 million and $11.5 million related to the estimated future payment of interest and penalties at December 31, 2020 and 2019, respectively. The amount of the unrecognized income tax benefits, including interest and penalties, as of December 31, 2020 that, if recognized, would affect the effective tax rate is $19.0 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 2018. 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. In the second quarter of 2020, we finalized an advance pricing agreement in a foreign jurisdiction, which resulted in a cash payment to the tax authorities of $18.5 million and a reduction of our liability for unrecognized tax benefits and related interest and penalties of $25.3 million. 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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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