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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

16. 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. Significant components of earnings before income taxes and the provision for income taxes are as follows (in millions):

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Earnings before income taxes:

 

 

 

 

 

 

 

 

 

United States

 

$

972.1

 

 

$

605.0

 

 

$

781.6

 

 

 

 

 

 

 

 

 

 

 

Foreign, principally Australia, Canada, New Zealand
   and the U.K.

 

 

902.7

 

 

 

580.1

 

 

 

545.4

 

Total earnings before income taxes

 

$

1,874.8

 

 

$

1,185.1

 

 

$

1,327.0

 

Provision for income taxes:

 

 

 

 

 

 

 

 

 

Federal:

 

 

 

 

 

 

 

 

 

Current

 

$

38.0

 

 

$

(21.4

)

 

$

109.1

 

Deferred

 

 

112.1

 

 

 

112.9

 

 

 

(3.5

)

 

 

150.1

 

 

 

91.5

 

 

 

105.6

 

State and local:

 

 

 

 

 

 

 

 

 

Current

 

 

53.3

 

 

 

(15.4

)

 

 

114.3

 

Deferred

 

 

(1.3

)

 

 

43.0

 

 

 

(83.5

)

 

 

52.0

 

 

 

27.6

 

 

 

30.8

 

Foreign:

 

 

 

 

 

 

 

 

 

Current

 

 

194.3

 

 

 

212.8

 

 

 

196.6

 

Deferred

 

 

8.0

 

 

 

(112.8

)

 

 

(122.0

)

 

 

202.3

 

 

 

100.0

 

 

 

74.6

 

Total provision for income taxes

 

$

404.4

 

 

$

219.1

 

 

$

211.0

 

 

 

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,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

Amount

 

 

% of Pretax
Earnings

 

 

Amount

 

 

% of Pretax
Earnings

 

 

Amount

 

 

% of Pretax
Earnings

 

Federal statutory rate

 

$

393.7

 

 

 

21.0

 

 

$

248.9

 

 

 

21.0

 

 

$

278.7

 

 

 

21.0

 

State income taxes - net of
   federal benefit

 

 

61.0

 

 

 

3.3

 

 

 

49.7

 

 

 

4.2

 

 

 

32.9

 

 

 

2.5

 

Differences related to non U.S. operations

 

 

(13.8

)

 

 

(0.7

)

 

 

(20.6

)

 

 

(1.7

)

 

 

(31.9

)

 

 

(2.4

)

Alternative energy and other
   tax credits

 

 

(8.9

)

 

 

(0.5

)

 

 

(7.9

)

 

 

(0.7

)

 

 

(6.9

)

 

 

(0.5

)

Other permanent differences

 

 

42.6

 

 

 

2.3

 

 

 

27.6

 

 

 

2.3

 

 

 

22.5

 

 

 

1.7

 

Stock-based compensation

 

 

(88.9

)

 

 

(4.7

)

 

 

(76.1

)

 

 

(6.4

)

 

 

(59.3

)

 

 

(4.5

)

Changes in unrecognized tax benefits

 

 

7.4

 

 

 

0.4

 

 

 

11.9

 

 

 

1.0

 

 

 

4.0

 

 

 

0.3

 

Change in valuation allowance

 

 

10.0

 

 

 

0.5

 

 

 

3.9

 

 

 

0.3

 

 

 

15.5

 

 

 

1.2

 

Change in tax rates

 

 

1.3

 

 

 

—

 

 

 

(18.3

)

 

 

(1.5

)

 

 

(44.5

)

 

 

(3.4

)

Provision for income taxes

 

$

404.4

 

 

 

21.6

 

 

$

219.1

 

 

 

18.5

 

 

$

211.0

 

 

 

15.9

 

 

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows (in millions):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Gross unrecognized tax benefits at January 1

 

$

25.3

 

 

$

13.4

 

Increases in tax positions for current year

 

 

1.2

 

 

 

14.6

 

Settlements

 

 

(2.6

)

 

 

(2.9

)

Lapse in statute of limitations

 

 

(5.5

)

 

 

(3.4

)

Increases in tax positions for prior years

 

 

17.0

 

 

 

3.6

 

Decreases in tax positions for prior years

 

 

(10.2

)

 

 

—

 

Gross unrecognized tax benefits at December 31

 

$

25.2

 

 

$

25.3

 

 

The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $24.7 million and $24.5 million at December 31, 2024 and 2023, respectively. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2024 and 2023, we had accrued interest and penalties related to unrecognized tax benefits of $10.3 million and $2.8 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, 2024, our corporate returns had been examined by the IRS or the statute had lapsed through calendar year 2020. In addition, from 2020 forward, various state and foreign jurisdictions remain open. 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,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Alternative minimum tax and other credit carryforwards

 

$

768.9

 

 

$

867.3

 

Accrued and unfunded compensation and employee benefits

 

 

431.5

 

 

 

364.4

 

Amortizable intangible assets

 

 

94.7

 

 

 

122.9

 

Compensation expense related to stock options

 

 

21.9

 

 

 

18.3

 

Accrued liabilities

 

 

125.9

 

 

 

129.9

 

Investments

 

 

1.9

 

 

 

1.2

 

Net operating loss carryforwards

 

 

162.7

 

 

 

172.7

 

Capital loss carryforwards

 

 

8.4

 

 

 

8.5

 

Other tax attributes

 

 

1.9

 

 

 

34.7

 

Depreciable fixed assets

 

 

22.0

 

 

 

13.2

 

Lease liabilities

 

 

106.4

 

 

 

103.4

 

Capitalized indirect property costs

 

 

0.2

 

 

 

0.2

 

Revenue recognition

 

 

4.6

 

 

 

42.1

 

Other

 

 

5.2

 

 

 

10.1

 

Total deferred tax assets

 

 

1,756.2

 

 

 

1,888.9

 

Valuation allowance for deferred tax assets

 

 

(176.5

)

 

 

(195.8

)

Deferred tax assets

 

 

1,579.7

 

 

 

1,693.1

 

Deferred tax liabilities:

 

 

 

 

 

 

Nondeductible amortizable intangible assets

 

 

564.8

 

 

 

531.7

 

Accrued pension liability

 

 

8.6

 

 

 

1.7

 

Investment-related partnerships

 

 

4.2

 

 

 

6.5

 

Right-of-use assets

 

 

97.1

 

 

 

95.0

 

Hedging instruments

 

 

35.7

 

 

 

38.2

 

Other prepaid items

 

 

16.4

 

 

 

17.4

 

Total deferred tax liabilities

 

 

726.8

 

 

 

690.5

 

Net deferred tax assets

 

$

852.9

 

 

$

1,002.6

 

 

At December 31, 2024 and 2023, $106.3 million and $129.6 million, respectively, of deferred tax liabilities have been included in noncurrent liabilities in the accompanying consolidated balance sheet. General business and other tax credits of $736.9 million begin to expire, if not utilized, in 2032 and state credits, net of federal benefit, of $32.0 million expire, if not used, by 2028. Net operating loss carryforwards of $162.7 million, related to federal, state and foreign begin to expire, if not utilized in 2025. We expect the historically favorable trend in earnings before income taxes to continue in the foreseeable future. Valuation allowances have been established for certain foreign intangible assets (including nondeductible amortization and earnout payable expenses) and various state net operating loss carryforwards that may not be utilized in the future.

At December 31, 2024, 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 $812.3 million and $632.3 million at December 31, 2024 and 2023, 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, 2024 and 2023.

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 2024, 2023 and 2022. 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 2024, 2023 and 2022, and we do not currently anticipate any significant long-term impact from the BEAT in our provision for income taxes in future periods.