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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Income before provision for income taxes for the years ended December 31, 2017, 2016, and 2015, consisted of the following (in millions):
| Years Ended December 31,
| 2017 |  | 2016 |  | 2015
U.S. | $ | 765.0 |  |  | $ | 653.0 |  |  | $ | 425.1 |
Foreign | 331.5 |  |  | 327.8 |  |  | 333.4 |
Total income before provision for income taxes | $ | 1,096.5 |  |  | $ | 980.8 |  |  | $ | 758.5 |
The provision for income taxes for the years ended December 31, 2017, 2016, and 2015, consisted of the following (in millions):
| Years Ended December 31,
| 2017 |  | 2016 |  | 2015
Current |  |  |  |  |
Federal | $ | 352.1 |  |  | $ | 207.0 |  |  | $ | 148.7 |
State | 13.0 |  |  | 13.4 |  |  | 8.4 |
Foreign | 8.7 |  |  | 5.4 |  |  | 7.6 |
| $ | 373.8 |  |  | $ | 225.8 |  |  | $ | 164.7 |
Deferred |  |  |  |  |
Federal | $ | 65.5 |  |  | $ | 18.3 |  |  | $ | 7.5 |
State | (0.4 | ) |  | 0.6 |  |  | 0.5 |
Foreign | (2.4 | ) |  | 0.2 |  |  | (3.0 | )
| $ | 62.7 |  |  | $ | 19.1 |  |  | $ | 5.0 |
Total income tax expense | $ | 436.5 |  |  | $ | 244.9 |  |  | $ | 169.7 |
Income tax expense differs from amounts computed by applying the statutory federal income rate of 35% for the years ended December 31, 2017, 2016, and 2015, as a result of the following (in millions):
| Years Ended December 31,
| 2017 |  | 2016 |  | 2015
Federal tax at statutory rate | $ | 383.8 |  |  | $ | 343.3 |  |  | $ | 265.5 |
Increase (reduction) in tax resulting from: |  |  |  |  |
State taxes, net of federal benefits | 16.0 |  |  | 14.0 |  |  | 8.9 |
Foreign rate differential | (107.3 | ) |  | (86.2 | ) |  | (67.4 | )
Research and development credit | (15.3 | ) |  | (7.8 | ) |  | (6.4 | )
Share-based compensation not benefited | 10.8 |  |  | 3.6 |  |  | 6.9 |
Domestic production activities deduction | (7.9 | ) |  | (8.0 | ) |  | (5.3 | )
Reversal of unrecognized tax benefits | (62.4 | ) |  | (15.8 | ) |  | (6.4 | )
Reversal of share-based compensation from intercompany charges | — |  |  | — |  |  | (25.0 | )
Tax Cuts and Jobs Act impact | 317.8 |  |  | — |  |  | — |
Excess tax benefits | (102.8 | ) |  | — |  |  | — |
Other | 3.8 |  |  | 1.8 |  |  | (1.1 | )
Total income tax expense | $ | 436.5 |  |  | $ | 244.9 |  |  | $ | 169.7 |
Deferred income taxes reflect tax carry forwards and the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in millions):
| December 31,
| 2017 |  | 2016
Deferred tax assets: |  |  |
Share-based compensation expense | $ | 79.1 |  |  | $ | 122.2 |
Expenses deducted in later years for tax purposes | 29.7 |  |  | 47.4 |
Research and other credits | 27.5 |  |  | 15.6 |
Other | 10.5 |  |  | 9.8 |
Gross deferred tax assets | $ | 146.8 |  |  | $ | 195.0 |
Valuation allowance | (29.4 | ) |  | (17.2 | )
Deferred tax assets | $ | 117.4 |  |  | $ | 177.8 |
Deferred tax liabilities: |  |  |
Fixed assets | $ | (26.3 | ) |  | $ | (25.2 | )
Intangible assets | (3.6 | ) |  | (2.3 | )
Other | (0.2 | ) |  | (0.2 | )
Deferred tax liabilities | $ | (30.1 | ) |  | $ | (27.7 | )
Net deferred tax assets | $ | 87.3 |  |  | $ | 150.1 |
The 2017 Tax Act was enacted on December 22, 2017. The 2017 Tax Act includes a number of changes in existing tax law impacting businesses, including a one-time deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018. Under U.S. GAAP, changes in tax rates and tax law are accounted for in the period of enactment and deferred tax assets and liabilities are measured at the enacted tax rate. Consistent with guidance issued by the Securities Exchange Commission (“SEC”), which provides for a measurement period of one year from the enactment date to finalize the accounting for effects of the 2017 Tax Act, the Company provisionally recorded an income tax expense of $317.8 million related to the 2017 Tax Act. Based on information available, the Company estimated the cumulative undistributed foreign earnings to be approximately $1,873.8 million and recorded a provisional estimate of $270.2 million of income tax expense related to the one-time deemed repatriation toll charge, which will be payable over eight years. As a result of the 2017 Tax Act, the Company can repatriate the cumulative undistributed foreign earnings back to the U.S. when needed with minimal U.S. income tax consequences other than the one-time deemed repatriation toll charge. The Company is still evaluating whether to change its indefinite reinvestment assertion in light of the 2017 Tax Act and consider that conclusion to be incomplete under guidance issued by the SEC. If the Company subsequently changes its assertion during the measurement period, the Company will account for the change in assertion as part of the 2017 Tax Act enactment. In addition, the Company recorded a provisional estimate of $47.6 million income tax expense due to the re-measurement of its net deferred tax assets at a U.S. federal statutory rate that was reduced from 35% to 21%. For the GILTI provisions of the 2017 Tax Act, a provisional estimate could not be made as the Company has not yet completed its assessment or elected an accounting policy to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred. In accordance with SEC guidance, provisional amounts may be refined as a result of additional guidance from, and interpretations by, U.S. regulatory and standard-setting bodies, and changes in assumptions. In the subsequent period, provisional amounts will be adjusted for the effects, if any, of interpretative guidance issued after December 31, 2017, by the U.S. Department of the Treasury. The effects of the 2017 Tax Act may be subject to changes for items that were previously reported as provisional amounts, as well as any element of the 2017 Tax Act that a provisional estimate could not be made, and such changes could be material. The Company adopted ASU No. 2016-09 in the first quarter of 2017, which resulted in excess tax benefits associated with employee equity plans of $102.8 million being recognized in the income tax provision for the year ended December 31, 2017. Excess tax benefits associated with employee equity plans was previously recorded in additional paid-in capital and the adoption of this ASU resulted in reducing the Company’s effective tax rate by 9.4 percentage points for the year ended December 31, 2017. The amount of excess tax benefits or deficiencies will fluctuate from period to period based on the price of the Company’s stock, the volume of share-based instruments settled or vested, and the value assigned to employee equity awards under U.S. GAAP. The Company’s tax holiday obtained in 2007 for business operations in Switzerland ended on December 31, 2017. The tax benefit from the tax holiday for the year ended December 31, 2017, was approximately $10.9 million, or $0.09 per diluted share. The Company received a new tax ruling in Switzerland for new business operations. The new ruling is effective for years 2018 through 2022, which will be extended for the next five years thereafter, to the extent certain terms and conditions continue to be met. The new ruling would allow for a reduced cantonal tax rate based on various thresholds of investment, including the ownership, development, and use of the non-U.S. intellectual property rights and employment in such jurisdiction. The transfer of ownership of such intellectual property rights to the Company's Swiss entity did not impact the Consolidated Financial Statements for the periods presented. As of December 31, 2017, and 2016, the Company had valuation allowances of $29.4 million and $17.2 million, respectively, primarily related to California deferred tax assets generated by California R&D credit forwards which have no expiration period. The Company recorded a valuation allowance against its California deferred tax assets as it is more likely than not these deferred tax assets will not be realized as a result of the computation of California taxes under the single sales factor. The Company recorded a net decrease of its gross unrecognized tax benefits of approximately $40.6 million during the year ended December 31, 2017. The net decrease was primarily due to the reversal of gross unrecognized tax benefits in connection with the expiration of certain statutes of limitation in various jurisdictions and associated re-measurement of uncertain tax position, partially offset by increases related to 2017 uncertain tax positions. The Company had gross unrecognized tax benefits of approximately $65.4 million, $106.0 million, and $92.4 million as of December 31, 2017, 2016, and 2015, respectively, which if recognized, would result in a reduction of the Company’s effective tax rate. The Company included interest expense accrued on unrecognized tax benefits as a component of its income tax expense. As of December 31, 2017, 2016, and 2015, gross interest related to unrecognized tax benefits accrued was approximately $1.8 million, $3.7 million, and $2.9 million, respectively. A majority of the Company's net unrecognized tax benefits and related interest is presented in Other accrued liabilities on the Consolidated Balance Sheets. A reconciliation of the beginning and ending amounts of gross unrecognized income tax benefits for the years ended December 31, 2017, 2016, and 2015, are as follows (in millions):
| Years Ended December 31,
| 2017 |  | 2016 |  | 2015
Beginning balance | $ | 106.0 |  |  | $ | 92.4 |  |  | $ | 75.5 |
Increases related to tax positions taken during the current year | 21.1 |  |  | 29.9 |  |  | 28.9 |
Increases related to tax positions taken during a prior year | — |  |  | — |  |  | 0.3 |
Decreases related to tax positions taken during a prior year | (46.5 | ) |  | (0.5 | ) |  | — |
Decreases related to settlements with tax authorities | (0.5 | ) |  | — |  |  | (11.4 | )
Decreases related to expiration of statute of limitations | (14.7 | ) |  | (15.8 | ) |  | (0.9 | )
Ending balance | $ | 65.4 |  |  | $ | 106.0 |  |  | $ | 92.4 |
The Company files federal, state and foreign income tax returns in many U.S. and OUS jurisdictions. Years before 2014 are closed for the significant jurisdictions. Certain of the Company’s unrecognized tax benefits could change due to activities of various tax authorities, including potential assessment of additional tax, possible settlement of audits, or through normal expiration of various statutes of limitations, which could affect the Company’s effective tax rate in the period in which they change. Due to the uncertainty related to the timing and potential outcome of audits, the Company cannot estimate the range of reasonably possible change in unrecognized tax benefits that may occur in the next 12 months. The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other tax authorities. The outcome of these audits cannot be predicted with certainty. The Company's management regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of the Company’s provision for income taxes. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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