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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 19. Income Taxes We and our principal domestic subsidiaries are included in a consolidated U.S. federal income tax return. Our international subsidiaries file various income tax returns in their jurisdictions. Earnings before income taxes in the table below include the impact of intercompany interest expense between domestic and foreign legal entities. Domestic intercompany interest income and offsetting foreign intercompany interest expense were $24.0 million in 2020, $40.1 million in 2019 and $65.8 million in 2018. Significant components of earnings before income taxes and the provision for income taxes are as follows (in millions):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Earnings before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 524.4 |  |  | $ | 388.4 |  |  | $ | 337.6 |
Foreign, principally Australia, Canada, New Zealand and the U.K. |  |  | 346.5 |  |  |  | 237.7 |  |  |  | 141.8 |
Total earnings before income taxes |  | $ | 870.9 |  |  | $ | 626.1 |  |  | $ | 479.4 |
Provision (benefit) for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 43.6 |  |  | $ | 3.8 |  |  | $ | — |
Deferred |  |  | (112.4 | ) |  |  | (142.5 | ) |  |  | (214.0 | )
|  |  | (68.8 | ) |  |  | (138.7 | ) |  |  | (214.0 | )
State and local: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 36.6 |  |  |  | 11.1 |  |  |  | 15.4 |
Deferred |  |  | (19.3 | ) |  |  | (6.0 | ) |  |  | (29.0 | )
|  |  | 17.3 |  |  |  | 5.1 |  |  |  | (13.6 | )
Foreign: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 94.6 |  |  |  | 66.6 |  |  |  | 60.7 |
Deferred |  |  | (30.3 | ) |  |  | (22.7 | ) |  |  | (29.6 | )
|  |  | 64.3 |  |  |  | 43.9 |  |  |  | 31.1 |
Total provision (benefit) for income taxes |  | $ | 12.8 |  |  | $ | (89.7 | ) |  | $ | (196.5 | )
A reconciliation of the provision for income taxes with the U.S. federal statutory income tax rate is as follows (in millions, except percentages):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | Amount |  |  | % of Pretax Earnings |  |  | Amount |  |  | % of Pretax Earnings |  |  | Amount |  |  | % of Pretax Earnings |
Federal statutory rate |  | $ | 182.9 |  |  |  | 21.0 |  |  | $ | 131.5 |  |  |  | 21.0 |  |  | $ | 100.7 |  |  |  | 21.0 |
State income taxes - net of Federal benefit |  |  | 22.2 |  |  |  | 2.6 |  |  |  | 4.4 |  |  |  | 0.7 |  |  |  | 8.5 |  |  |  | 1.8 |
Differences related to non U.S. operations |  |  | (2.5 | ) |  |  | (0.3 | ) |  |  | (10.1 | ) |  |  | (1.6 | ) |  |  | (14.8 | ) |  |  | (3.1 | )
Alternative energy and other tax credits |  |  | (154.3 | ) |  |  | (17.7 | ) |  |  | (196.1 | ) |  |  | (31.3 | ) |  |  | (252.9 | ) |  |  | (52.8 | )
Other permanent differences |  |  | (15.7 | ) |  |  | (1.8 | ) |  |  | (7.6 | ) |  |  | (1.2 | ) |  |  | 0.9 |  |  |  | 0.2 |
U.S. repatriation tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1.8 | ) |  |  | (0.4 | )
Stock-based compensation |  |  | (31.4 | ) |  |  | (3.6 | ) |  |  | (16.2 | ) |  |  | (2.6 | ) |  |  | (15.0 | ) |  |  | (3.1 | )
Changes in unrecognized tax benefits |  |  | - |  |  |  | - |  |  |  | 0.8 |  |  |  | 0.1 |  |  |  | (0.2 | ) |  |  | - |
Change in valuation allowance |  |  | 6.5 |  |  |  | 0.7 |  |  |  | 7.5 |  |  |  | 1.2 |  |  |  | (22.0 | ) |  |  | (4.6 | )
Change in tax rates |  |  | 5.5 |  |  |  | 0.6 |  |  |  | (3.7 | ) |  |  | (0.6 | ) |  |  | - |  |  |  | - |
Other |  |  | (0.4 | ) |  |  | - |  |  |  | (0.2 | ) |  |  | - |  |  |  | 0.1 |  |  |  | - |
Provision (benefit) for income taxes |  | $ | 12.8 |  |  | $ | 1.5 |  |  | $ | (89.7 | ) |  | $ | (14.3 | ) |  | $ | (196.5 | ) |  | $ | (41.0 | )
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows (in millions):
|  | December 31, |
|  | 2020 |  |  | 2019 |
Gross unrecognized tax benefits at January 1 |  | $ | 11.5 |  |  | $ | 10.7 |
Increases in tax positions for current year |  |  | 2.9 |  |  |  | 2.1 |
Settlements |  |  | (1.1 | ) |  |  | (0.4 | )
Lapse in statute of limitations |  |  | (1.2 | ) |  |  | (1.1 | )
Increases in tax positions for prior years |  |  | 0.2 |  |  |  | 0.6 |
Decreases in tax positions for prior years |  |  | (1.1 | ) |  |  | (0.4 | )
Gross unrecognized tax benefits at December 31 |  | $ | 11.2 |  |  | $ | 11.5 |
The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $9.5 million and $9.4 million at December 31, 2020 and 2019, respectively. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2020 and 2019, we had accrued interest and penalties related to unrecognized tax benefits of $3.0 million and $3.1 million, respectively. We file income tax returns in the U.S. and in various state, local and foreign jurisdictions. We are routinely examined by tax authorities in these jurisdictions. At December 31, 2020, our corporate returns had been examined by the IRS through calendar year 2010. The IRS is currently conducting various examinations of calendar years 2011 and 2012. In addition, a number of foreign, state, local and partnership examinations for later years are currently ongoing. It is reasonably possible that our gross unrecognized tax benefits may change within the next twelve months. However, we believe any changes in the recorded balance would not have a significant impact on our consolidated financial statements. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in millions):
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Alternative minimum tax and other credit carryforwards |  | $ | 998.0 |  |  | $ | 962.1 |
Accrued and unfunded compensation and employee benefits |  |  | 239.9 |  |  |  | 156.0 |
Amortizable intangible assets |  |  | 61.3 |  |  |  | 54.3 |
Compensation expense related to stock options |  |  | 14.4 |  |  |  | 11.3 |
Accrued liabilities |  |  | 65.7 |  |  |  | 63.9 |
Accrued pension liability |  |  | 9.3 |  |  |  | 9.9 |
Investments |  |  | 1.3 |  |  |  | 0.9 |
Net operating loss carryforwards |  |  | 36.1 |  |  |  | 37.2 |
Capital loss carryforwards |  |  | 9.0 |  |  |  | 12.6 |
Lease liabilities |  |  | 96.3 |  |  |  | 65.3 |
Hedging instruments |  |  | 34.6 |  |  |  | 11.7 |
Other |  |  | 2.8 |  |  |  | 4.3 |
Total deferred tax assets |  |  | 1,568.7 |  |  |  | 1,389.5 |
Valuation allowance for deferred tax assets |  |  | (94.9 | ) |  |  | (80.5 | )
Deferred tax assets |  |  | 1,473.8 |  |  |  | 1,309.0 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Nondeductible amortizable intangible assets |  |  | 316.9 |  |  |  | 322.4 |
Investment-related partnerships |  |  | 8.5 |  |  |  | 9.1 |
Depreciable fixed assets |  |  | 32.4 |  |  |  | 22.4 |
Right-of-use assets |  |  | 92.2 |  |  |  | 62.6 |
Revenue recognition |  |  | 33.1 |  |  |  | 63.7 |
Other prepaid items |  |  | 12.0 |  |  |  | 10.6 |
Total deferred tax liabilities |  |  | 495.1 |  |  |  | 490.8 |
Net deferred tax assets |  | $ | 978.7 |  |  | $ | 818.2 |
At December 31, 2020 and 2019, $106.9 million and $127.5 million, respectively, have been included in noncurrent liabilities in the accompanying consolidated balance sheet. AMT credits have been utilized or refunded in 2020, due to the CARES Act legislation, general business and other tax credits of $983.0 million begin to expire, if not utilized, in 2034 and state credits, net of federal benefit, of $15.0 million expire, if not used, by 2025. Net operating loss carryforwards of $36.1 million, related to federal, state and foreign begin to expire, if not utilized in 2023. We expect the historically favorable trend in earnings before income taxes to continue in the foreseeable future. Accordingly, we expect to make full use of the net deferred tax assets. Valuation allowances have been established for certain foreign intangible assets and various net operating loss carryforwards that may not be utilized in the future. At December 31, 2020, foreign earnings in all jurisdictions are considered indefinitely reinvested offshore. We have not provided for state or withholding income taxes on the undistributed earnings of $658.9 million and $574.0 million at December 31, 2020 and 2019, respectively, of foreign subsidiaries which are considered permanently invested outside of the U.S. The amount of unrecognized deferred tax liability on these undistributed earnings was not material at December 31, 2020 and 2019. Current U.S. tax law requires U.S. shareholders to include in income certain “global intangible low-taxed income” (which we refer to as GILTI) beginning in 2018. Our policy is to include the GILTI income in the future period when the tax arises and we recorded income tax expense on such income in 2020, 2019 and 2018. Current U.S. tax law includes the U.S. Base Erosion and Anti-Abuse Tax (which we refer to as BEAT) beginning in 2018. Based on our analysis, we determined that our base erosion payments do not exceed the threshold for applicability for the years in 2020, 2019 and 2018, and we do not currently anticipate any significant long-term impact from the BEAT in our provision for income taxes in future periods. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act contains several significant business tax provisions that could affect a company’s accounting for income taxes. See discussion of the various impacts of the CARES Act below. Deferred Income Taxes - In the 2018 consolidated financial statements, we finalized the revaluation of our net deferred tax asset as a result of the TCJA by recognizing an additional $2.9 million net benefit to the provision for income taxes. The CARES Act amends Section 53(e) of the TCJA so that all prior year minimum tax credits are available for refund for the first taxable year of a corporation beginning in 2018. We have adjusted the deferred tax asset classification of the remaining AMT credits as a result of the AMT credit acceleration. All remaining AMT credits were utilized as part of our 2019 federal income tax return and refunded in 2020. The CARES Act also delayed certain payroll taxes until the years 2021 and 2022. At December 31, 2020, $12.9 million of deferred tax assets have been included due to deferral of payroll taxes, which will be reversed in 2021 and 2022.

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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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