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Income Taxes | 3 Months Ended
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Mar. 31, 2020
Income Taxes |
Income Taxes | 4. Income Taxes Our effective income tax rate was 17.0% and 24.8% for the three months ended March 31, 2020 and 2019, respectively. This decrease in our effective income tax rate was primarily driven by the impacts of excess tax benefits related to equity-based compensation and a non-deductible impairment recognized in 2019, both discussed further below. We evaluate our effective income tax rate at each interim period and adjust it as facts and circumstances warrant. Equity-Based Compensation — During the three months ended March 31, 2020 and 2019, we recognized a reduction in our income tax expense of $21 million and $13 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards. Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties. We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate. The low-income housing investments qualify for federal tax credits that we expect to realize through 2030 under Section 42 or Section 45D of the Internal Revenue Code. We also hold a residual financial interest in an entity that owns a refined coal facility that qualified for federal tax credits under Section 45 of the Internal Revenue Code through 2019. The entity sold the majority of its assets in 2020. The sale resulted in a $7 million non-cash impairment of our investment during the three months ended March 31, 2020. We account for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net losses of unconsolidated entities, within our Condensed Consolidated Statements of Operations. During the three months ended March 31, 2020 and 2019, we recognized $26 million (including the $7 million impairment of the refined coal facility noted above) and $9 million of net losses, respectively. The related reduction in our income tax expense, which is primarily due to federal tax credits realized from the investments, was $24 million and $15 million for the three months ended March 31, 2020 and 2019, respectively. In addition, during the three months ended March 31, 2020 and 2019, we recognized interest expense of $3 million and $2 million, respectively, associated with our investments in low-income housing properties. See Note 13 for additional information related to these unconsolidated variable interest entities. Tax Implications of Impairment — We recognized a $52 million impairment charge during the three months ended March 31, 2019 which was not deductible for tax purposes. See Note 9 for additional information. Recent Legislation — On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, none of which directly affected our income tax expense in the first quarter of 2020 or are expected to have a material impact on our income tax expense in future reporting periods. The Company is evaluating the impact of the Act and currently expects to benefit from the deferral of certain payroll taxes through the end of calendar year 2020.

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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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