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INCOME TAXES | 9 Months Ended
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Sep. 30, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXESIncome tax expense for the three months ended September 30, 2022, was $78.1 million, or 19.4% of income before taxes, compared to $73.9 million, or 16.0% of income before taxes, for the three months ended September 30, 2021. Income tax expense for the nine months ended September 30, 2022, was $204.4 million, or 16.9% of income before taxes, compared to $90.7 million, or 6.3% of income before taxes, for the nine months ended September 30, 2021.The effective tax rates for the three and nine months ended September 30, 2022, and 2021, differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with employee equity plans, the effect of income earned by certain overseas entities being taxed at rates lower than the federal statutory rate, and the federal research and development (“R&D”) credit benefit, partially offset by U.S. tax on foreign earnings and state income taxes (net of federal benefit). The provision for income taxes for the three and nine months ended September 30, 2022, reflected the impact of a change in U.S. tax law effective January 1, 2022, which requires the capitalization and amortization of research and experimental (“R&E”) expenditures incurred after December 31, 2021. The effective tax rate for the three months ended September 30, 2021, included a one-time charge of $11.1 million related to intercompany charges for share-based compensation for relevant periods prior to 2020, triggered by additional Internal Revenue Service (“IRS”) guidance issued in July 2021 associated with a Ninth Circuit Court of Appeals opinion (the “Ninth Circuit Opinion”) involving an independent third party. The effective tax rate for the nine months ended September 30, 2021, included a one-time benefit of $66.4 million from re-measurement of the Company’s Swiss deferred tax assets resulting from the extension of the economic useful life of certain intangible assets. This benefit was partially offset by the one-time charge of $11.1 million for the three months ended September 30, 2021, related to additional IRS guidance issued associated with the Ninth Circuit Opinion noted above. The provision for income taxes for the three and nine months ended September 30, 2022, included excess tax benefits associated with employee equity plans of $18.1 million and $80.4 million, respectively, which reduced the Company’s effective tax rate by 4.5 and 6.6 percentage points, respectively. The provision for income taxes for the three and nine months ended September 30, 2021, included excess tax benefits associated with employee equity plans of $41.9 million and $158.9 million, respectively, which reduced the Company’s effective tax rate by 9.1 and 11.1 percentage points, respectively. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted in the United States. The IRA introduces a 15% alternative minimum tax based on the financial statement income of certain large corporations, effective for tax years beginning after December 31, 2022. The IRA also includes a 1% excise tax on the net fair market value of stock repurchases made after December 31, 2022. The Company considered the applicable tax law changes, and there is no impact to the Company’s tax provision for the three and nine months ended September 30, 2022. The Company will continue to evaluate the impact of these tax law changes on future periods. The Company files federal, state, and foreign income tax returns in many jurisdictions in the U.S. and abroad. Years prior to 2016 are considered closed for the most significant jurisdictions. Certain of the Company’s unrecognized tax benefits could change due to activities of various tax authorities, including evolving interpretations of existing tax laws in the jurisdictions that the Company operates, 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 IRS 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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