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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income before the provision for income taxes is attributable to the following jurisdictions for years ended December 31 (in thousands) :
|  | 2018 |  | 2017 |  | 2016
United States |  | $ | 622,214 |  |  | $ | 524,669 |  |  | $ | 383,427 |
Foreign |  | 472,911 |  |  | 368,921 |  |  | 259,492 |
Total |  | $ | 1,095,125 |  |  | $ | 893,590 |  |  | $ | 642,919 |
The provision for income taxes for the years ended December 31 consists of the following (in thousands):
|  | 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |  |
Federal |  | $ | 165,303 |  |  | $ | 303,514 |  |  | $ | 147,406 |
State |  | 26,036 |  |  | 19,234 |  |  | 10,725 |
Foreign |  | 95,053 |  |  | 78,354 |  |  | 61,084 |
Total current |  | 286,392 |  |  | 401,102 |  |  | 219,215 |
Deferred: |  |  |  |  |  |
Federal |  | (19,688 | ) |  | (255,188 | ) |  | (18,723 | )
State |  | 8,727 |  |  | 276 |  |  | 1,608 |
Foreign |  | 8,211 |  |  | 7,200 |  |  | (11,566 | )
Total deferred |  | (2,750 | ) |  | (247,712 | ) |  | (28,681 | )
Total provision |  | $ | 283,642 |  |  | $ | 153,390 |  |  | $ | 190,534 |
The provision for income taxes differs from amounts computed by applying the U.S. federal tax rate of 21% for 2018 and 35%, for 2017 and 2016, respectively, to income before income taxes for the years ended December 31, 2018, 2017 and 2016 due to the following (in thousands):
|  | 2018 |  | 2017 |  | 2016
Computed “expected” tax expense |  | $ | 229,976 |  |  | 21.0 | % |  | $ | 312,756 |  |  | 35.0 | % |  | $ | 225,022 |  |  | 35.0 | %
Changes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Change in valuation allowance |  | 25,193 |  |  | 2.8 |  |  | 18,289 |  |  | 2.0 |  |  | 11,952 |  |  | 1.9 |
Foreign income tax differential |  | 9,921 |  |  | 0.9 |  |  | (38,695 | ) |  | (4.3 | ) |  | (25,533 | ) |  | (4.0 | )
State taxes net of federal benefits |  | 20,480 |  |  | 1.9 |  |  | 12,884 |  |  | 1.4 |  |  | 9,439 |  |  | 1.5 |
Foreign-sourced nontaxable income |  | (28,861 | ) |  | (2.6 | ) |  | (8,836 | ) |  | (1.0 | ) |  | (13,659 | ) |  | (1.2 | )
Foreign Withholding Tax |  | 20,569 |  |  | 1.9 |  |  | 9,362 |  |  | 1.0 |  |  | 5,698 |  |  | — |
IRC Section 199 deduction |  | — |  |  | — |  |  | (8,844 | ) |  | (1.0 | ) |  | (7,731 | ) |  | (1.2 | )
Excess Tax Benefits Related to Stock-Based Compensation |  | (19,255 | ) |  | (1.8 | ) |  | (18,058 | ) |  | (2.0 | ) |  | (11,974 | ) |  | (1.9 | )
Impact of the Tax Act: |  |  |  |  |  |  |  |  |  |  |  |
One-Time Transition Tax |  | — |  |  | — |  |  | 195,779 |  |  | 21.9 |  |  | — |  |  | — |
Foreign Tax Credit - One-Time Transition Tax |  | 17,385 |  |  | 1.6 |  |  | (113,955 | ) |  | (12.8 | ) |  | — |  |  | — |
Deferred Tax Effects |  | 7,128 |  |  | 0.1 |  |  | (209,965 | ) |  | (23.5 | ) |  | — |  |  | — |
Sub-part F Income/GILTI |  | 40,200 |  |  | 3.7 |  |  | 3,741 |  |  | 0.4 |  |  | — |  |  | — |
Foreign Tax Credits |  | (52,095 | ) |  | (4.8 | ) |  | — |  |  | — |  |  | — |  |  | — |
Other |  | 13,001 |  |  | 1.2 |  |  | (1,068 | ) |  | 0.1 |  |  | (2,680 | ) |  | (0.4 | )
Provision for income taxes |  | $ | 283,642 |  |  | 25.9 | % |  | $ | 153,390 |  |  | 17.2 | % |  | $ | 190,534 |  |  | 29.7 | %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31 are as follows (in thousands):
|  | 2018 |  | 2017
Deferred tax assets: |  |  |  |
Accounts receivable, principally due to the allowance for doubtful accounts |  | $ | 8,518 |  |  | $ | 6,752 |
Accrued expenses not currently deductible for tax |  | 6,734 |  |  | 442 |
Stock based compensation |  | 40,081 |  |  | 37,274 |
Income tax credits |  | 26,770 |  |  | 376 |
Net operating loss carry forwards |  | 53,221 |  |  | 41,168 |
Investments |  | 39,062 |  |  | 37,804 |
Accrued escheat |  | 3,608 |  |  | 4,768 |
Other |  | 4,240 |  |  | 12,604 |
Deferred tax assets before valuation allowance |  | 182,234 |  |  | 141,188 |
Valuation allowance |  | (90,366 | ) |  | (59,349 | )
Deferred tax assets, net |  | 91,868 |  |  | 81,839 |
Deferred tax liabilities: |  |  |  |
Intangibles—including goodwill |  | (483,361 | ) |  | (508,958 | )
Basis difference in investment in foreign subsidiaries |  | (38,200 | ) |  | (39,287 | )
Property and equipment, prepaid expenses and other |  | (59,101 | ) |  | (50,705 | )
Deferred tax liabilities |  | (580,662 | ) |  | (598,950 | )
Net deferred tax liabilities |  | $ | (488,794 | ) |  | $ | (517,111 | )
The Company’s deferred tax balances are classified in its balance sheets as of December 31 as follows (in thousands):
|  | 2018 |  | 2017
Long term deferred tax assets and liabilities: |  |  |  |
Long term deferred tax assets |  | $ | 3,152 |  |  | $ | 1,801 |
Long term deferred tax liabilities |  | (491,946 | ) |  | (518,912 | )
Net deferred tax liabilities |  | $ | (488,794 | ) |  | $ | (517,111 | )
The valuation allowance for deferred tax assets changed during 2018 as follows (in thousands):
Balance at December 31, 2015 |  | $ | 62,605 |
Additions |  | 13,790 |
Balance at December 31, 2016 |  | 76,395 |
Additions |  | 5,332 |
Reduction in valuation allowance due to rate change from Tax Act |  | (22,378 | )
Balance at December 31, 2017 |  | 59,349 |
Additions based on changes in deferred tax assets |  | 25,193 |
Increase in valuation allowance due to rate change from Tax Act |  | 5,824 |
Balance at December 31, 2018 |  | $ | 90,366 |
The valuation allowances relate to basis differences in cost method investments, capital loss carryforwards, income tax credits, foreign net operating loss carryforwards and state net operating loss carryforwards. The net change in the total valuation allowance for the year ended December 31, 2018 was an increase of $25.2 million. The valuation increase from the prior year was primarily due to foreign tax credits generated in Luxembourg due to the payment of various withholding taxes outside of Luxembourg. The decrease in 2017 was primarily due to changes in the Company's deferred tax asset related to basis differences in an equity method investment. The increase in 2016 was primarily due to changes in the Company's deferred tax asset related to basis differences in a cost method investment. As of December 31, 2018, the Company had a net operating loss carryforward for state income tax purposes of approximately $552.4 million that is available to offset future state taxable income through 2029. Additionally, the Company had $68.9 million net operating loss carryforwards for foreign income tax purposes that are available to offset future foreign taxable income. The foreign net operating loss carryforwards will not expire in future years. The Company has provided a valuation allowance against $416.7 million of the net operating losses as it does not anticipate utilizing the losses in the foreseeable future. During 2018 and 2017, the Company had recorded accrued interest and penalties related to the unrecognized tax benefits of $1.5 million and $1.3 million, respectively. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits including interest and penalties for the years ended December 31, 2018, 2017 and 2016 is as follows (in thousands):
Unrecognized tax benefits at December 31, 2015 |  | $ | 21,834 |
Additions based on tax provisions related to the current year |  | 3,332 |
Additions based on tax provisions related to the prior year |  | 2,496 |
Deductions based on settlement/expiration of prior year tax positions |  | (1,507 | )
Unrecognized tax benefits at December 31, 2016 |  | 26,155 |
Additions based on tax provisions related to the current year |  | 4,143 |
Additions for tax positions due to acquisitions |  | 9,208 |
Additions based on tax provisions related to the prior year |  | 1,171 |
Deductions based on settlement/expiration of prior year tax positions |  | (9,119 | )
Unrecognized tax benefits at December 31, 2017 |  | 31,558 |
Additions based on tax provisions related to the current year |  | 3,755 |
Additions based on tax provisions related to the prior year |  | 3,000 |
Deductions based on settlement/expiration of prior year tax positions |  | (4,161 | )
Unrecognized tax benefits at December 31, 2018 |  | $ | 34,152 |
As of December 31, 2018, the Company had total unrecognized tax benefits of $34.2 million all of which, if recognized, would affect its effective tax rate. It is not anticipated that there are any unrecognized tax benefits that will significantly increase or decrease within the next twelve months. The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to 2011. The statute of limitations for the Company’s U.K. income tax returns has expired for years prior to 2016. The statute of limitations has expired for years prior to 2015 for the Company’s Czech Republic income tax returns, 2015 for the Company’s Russian income tax returns, 2013 for the Company’s Mexican income tax returns, 2013 for the Company’s Brazilian income tax returns, 2013 for the Company’s Luxembourg income tax returns, 2014 for the Company’s New Zealand income tax returns, and 2016 for the Company’s Australian income tax returns. Tax Act On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act introduced significant changes to U.S. income tax law. The following changes resulted from the Tax Act: (1) reduced the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) required companies to pay a one-time Deemed Repatriation Transition Tax (“Transition Tax”) on certain unrepatriated earnings of foreign subsidiaries that can be paid over eight years; (3) introduced a new tax designed to tax global intangible low-taxed income (GILTI), which allows for the possibility of using foreign tax credits (FTCs) and a deduction of up to 50 percent to offset the income tax liability (subject to some limitations); (4) repealed the domestic production activity deduction beginning January 1, 2018; (5) added new limitations on the deductibility of certain executive compensation; and (6) added a new limitation on the deduction of interest expense beginning January 1, 2018. The SEC staff issued SAB 118 on December 22, 2017, which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its consolidated financial statements as of December 31, 2017 in accordance with SAB 118. As the Company collected and prepared necessary data, and interpreted the additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company made adjustments, over the course of the year to the provisional amounts including refinements to deferred taxes. The accounting for the tax effects of the Tax Act has been completed as of December 31, 2018. The Company recognized a provisional net tax benefit of $128.2 million as of December 31, 2017. During the tax year ended December 31, 2018, the Company finalized its accounting for the income tax effects of the Tax Act in accordance with its understanding of the Tax Act and the guidance available as of the date of this filing. After the adjustments recognized during 2018, the overall net tax benefit of the Tax Act was adjusted to $103.7 million. The Company recognized the following measurement period adjustments to the provisional amount included in 2017. One-time Transition Tax The Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. The Company recorded a provisional amount for its one-time transitional tax liability of $81.8 million as of December 31, 2017. After the adjustments recognized during 2018, the provisional amount for the Company's one-time transition tax liability and income tax expense was $99.2 million, which represented its final transition tax liability. The increase to the transition tax was primarily the result of the Company's final foreign tax pools being lower than its estimated foreign tax pools, resulting in a decrease to utilized foreign tax credits. There were no other changes made to the one-time transition tax in 2018. On January 15, 2019, the IRS finalized regulations that govern the transition tax. The Company is in the process of analyzing these regulations. The Company does not expect any material impact to its financial statements as a consequence of the final regulations. Deferred Tax Effects Due to the change in the statutory tax rate from the Tax Act, the Company remeasured its deferred taxes as of December 31, 2017 to reflect the reduced rate that will apply in future periods when these deferred taxes are settled or realized. The Company recognized a deferred tax benefit of $210 million to reflect the reduced U.S. tax rate and other effects of the Tax Act as of December 31, 2017. The final deferred tax benefit was adjusted to $202.9 million during the one-year measurement period. The reduced benefit on deferred taxes was driven by the reduced federal benefit received on state income taxes as a result of the lower federal tax rate enacted by the Tax Act. The Company has not recorded incremental income taxes for any additional outside basis differences of approximately $1.5 billion in its investments in foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis differences in these entities is not practicable. Executive Compensation under Sec. 162(m) The Tax Act repeals the exceptions to the section 162(m) deduction limitation for commissions and performance-based compensation. The Tax Act provides a transition rule which states that the expansion of section 162(m) does not apply to any remuneration paid under a written, binding contract in effect on November 2, 2017, which was not materially modified on or after this date. The Tax Act did not specifically define the criteria for a binding contract and no further guidance was provided on this topic during the tax year ended December 31, 2017. Additional guidance in the form of IRS Notice 2018-68 was received during the year ended December 31, 2018. Based on analysis of IRS Notice 2018-68, the Company determined there would be no impact to the 162(m) calculation for share-based awards granted prior to November 2, 2017. The Company has determined the calculation to be complete and no change was made during the measurement period. Global Intangible Low Taxed Income (GILTI) The U.S. tax law changes created new rules that allow the Company to make an accounting policy election to treat taxes due on GILTI inclusions in taxable income as either a current period expense or reflect such inclusions related to temporary basis differences in the Company’s measurement of deferred taxes. The Company has elected to treat the GILTI inclusion as a current period expense. The Company recorded tax expense related to GILTI, net of allowable foreign tax credits, of $10.2 million for the tax year ended December 31, 2018.

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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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