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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income before income taxes is attributable to the following geographic locations for the years ended December 31, (in thousands):
| 2021 |  | 2020 |  | 2019
Domestic | $ | 137,492 |  |  | $ | 18,395 |  |  | $ | 328,806 |
Foreign | 471,460 |  |  | 497,830 |  |  | 363,791 |
Income before income taxes | $ | 608,952 |  |  | $ | 516,225 |  |  | $ | 692,597 |
The tax benefit (expenses) for income taxes consisted of the following components for the years ended December 31, (in thousands):
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 7,753 |  |  | $ | 4,552 |  |  | $ | (17,906) |
State and local | (156) |  |  | 1,597 |  |  | (4,624) |
Foreign | (76,450) |  |  | (171,092) |  |  | (135,356) |
Subtotal | (68,853) |  |  | (164,943) |  |  | (157,886) |
Deferred: |  |  |  |  |
Federal | 11,060 |  |  | 16,553 |  |  | (7,459) |
State and local | (1,411) |  |  | 704 |  |  | (1,775) |
Foreign | (50,020) |  |  | 1,535 |  |  | (18,232) |
Subtotal | (40,371) |  |  | 18,792 |  |  | (27,466) |
Income tax expense | $ | (109,224) |  |  | $ | (146,151) |  |  | $ | (185,352) |
State and foreign taxes not based on income are included in general and administrative expenses and the aggregate amounts were not significant for the years ended December 31, 2021, 2020 and 2019. The fiscal 2021, 2020, and 2019 income tax benefit (expenses) differed from the amounts computed by applying the U.S. federal income tax rate of 21% to pre-tax income as a result of the following for the years ended December 31 (in thousands):
| 2021 |  | 2020 |  | 2019
Federal tax at statutory rate | $ | (127,880) |  |  | $ | (109,906) |  |  | $ | (145,445) |
State and local tax (expense) benefit | (1,513) |  |  | 2,071 |  |  | (5,852) |
Deferred tax assets generated in current year not benefited | (19,703) |  |  | (12,852) |  |  | (5,398) |
Foreign income tax rate differential | (18,918) |  |  | (16,364) |  |  | (11,610) |
Non-deductible expenses | (10,579) |  |  | (4,427) |  |  | (1,021) |
Stock-based compensation expense | (1,385) |  |  | (954) |  |  | (2,105) |
Change in valuation allowance | (595) |  |  | 390 |  |  | (2,870) |
Foreign financing activities | (4,805) |  |  | (11,743) |  |  | (18,738) |
Loss on divestments | — |  |  | — |  |  | (3,277) |
Uncertain tax positions reserve | 50,059 |  |  | (38,014) |  |  | (35,724) |
Tax adjustments related to REIT | 39,164 |  |  | 50,107 |  |  | 63,614 |
Change in deferred tax adjustments | (1,251) |  |  | (136) |  |  | (10,574) |
Effect of tax rate change on deferred tax assets | (12,297) |  |  | — |  |  | — |
Other, net | 479 |  |  | (4,323) |  |  | (6,352) |
Total income tax expense | $ | (109,224) |  |  | $ | (146,151) |  |  | $ | (185,352) |
Of the unrecognized tax benefits being realized in the year ended December 31, 2021, approximately $32.0 million is related to the uncertain tax position inherited from the Metronode Acquisition in 2018, which is related to an outstanding income tax audit at the time of the acquisition. The uncertain tax position was covered by an indemnification agreement with the Seller. The income tax audit was settled during 2021, as such, the realization of the unrecognized tax benefits resulted in an impairment of the indemnification asset for the same amount, which has been included in Other Income (Expense) on the Consolidated Statements of Operations for the year ended December 31, 2021. Our accounting policy is to treat any tax on Global Intangible Low-Taxed Income ("GILTI") inclusions as a current period cost included in the tax expense in the year incurred. We believe the GILTI inclusion provision will result in no material financial statement impact provided we satisfy our REIT distribution requirement with respect to the GILTI inclusions. As a result of our conversion to a REIT effective January 1, 2015, it is no longer our intent to indefinitely reinvest undistributed foreign earnings. However, no deferred tax liability has been recognized to account for this change because the expected recovery of the basis difference will not result in material U.S. taxes in the post-REIT conversion periods due to the fact that the majority of our foreign subsidiaries are either QRSs or owned directly by our REIT and QRSs, and the foreign withholding tax effect would be immaterial. We continue to assess the foreign withholding tax impact of our current policy and do not believe the distribution of our foreign earnings would trigger any significant foreign withholding taxes, as the majority of the foreign jurisdictions where we operate do not impose withholding taxes on dividend distributions to a corporate U.S. parent. The types of temporary differences that give rise to significant portions of our deferred tax assets and liabilities are set out below as of December 31 (in thousands):
| 2021 |  | 2020 (1)
Deferred tax assets: |  |  |
Stock-based compensation expense | $ | 9,057 |  |  | $ | 5,583 |
Net unrealized losses | — |  |  | 17,268 |
Operating lease liabilities | 225,261 |  |  | 187,912 |
Capital lease liabilities | 13,927 |  |  | 26,655 |
Deferred revenue | 14,429 |  |  | 10,785 |
Loss carryforwards and tax credits | 201,132 |  |  | 117,150 |
Others, net | 7,257 |  |  | 4,296 |
Gross deferred tax assets | 471,063 |  |  | 369,649 |
Valuation allowance | (100,746) |  |  | (82,344) |
Total deferred tax assets, net | 370,317 |  |  | 287,305 |
Deferred tax liabilities: |  |  |
Net unrealized gains | (1,462) |  |  | — |
Property, plant and equipment | (262,532) |  |  | (145,314) |
Right-of-use assets | (233,199) |  |  | (201,714) |
Deferred income | (33,052) |  |  | (31,538) |
Intangible assets | (120,543) |  |  | (132,681) |
Total deferred tax liabilities | (650,788) |  |  | (511,247) |
Net deferred tax liabilities | $ | (280,471) |  |  | $ | (223,942) |
(1) The prior year amounts presented in the table above have been reclassified to conform with the current year presentation. The tax basis of REIT assets, excluding investments in TRSs, is greater than the amounts reported for such assets in the accompanying consolidated balance sheet by approximately $2.2 billion as of December 31, 2021. Our accounting for deferred taxes involves weighing positive and negative evidence concerning the realizability of our deferred tax assets in each taxing jurisdiction. After considering evidence such as the nature, frequency and severity of current and cumulative financial reporting losses, the sources of future taxable income, taxable income in carryback years permitted by the tax laws and tax planning strategies, we concluded that valuation allowances were required in certain jurisdictions. The operations in most of the jurisdictions for which a valuation allowance has been established have a history of significant losses as of December 31, 2021. As such, we do not believe these operations have established a sustained history of profitability and that a valuation allowance is, therefore, necessary. We also provided a valuation allowance against certain gross deferred tax assets in certain taxing jurisdictions as these deferred tax assets are not expected to be realizable in the foreseeable future. Changes in the valuation allowance for deferred tax assets for the years ended December 31, 2021, 2020 and 2019 are as follows (in thousands):
| 2021 |  | 2020 |  | 2019
Beginning balance | $ | 82,344 |  |  | $ | 57,812 |  |  | $ | 57,003 |
Amounts from acquisitions | 964 |  |  | 5,777 |  |  | (2,707) |
Divested balances | — |  |  | — |  |  | (351) |
Amounts recognized into income | 595 |  |  | (390) |  |  | 2,870 |
Current increase | 19,539 |  |  | 15,044 |  |  | 697 |
Impact of foreign currency exchange | (2,696) |  |  | 4,101 |  |  | 300 |
Ending balance | $ | 100,746 |  |  | $ | 82,344 |  |  | $ | 57,812 |
Our NOL carryforwards for federal, state and foreign tax purposes which expire, if not utilized, at various intervals from 2022, are outlined below (in thousands):
Expiration Date |  | Federal (1) |  | State |  | Foreign (2) (3) |  | Total
2022 |  | $ | 20,808 |  |  | $ | — |  |  | $ | 754 |  |  | $ | 21,562 |
2023 to 2025 |  | 26,838 |  |  | 112 |  |  | 25,876 |  |  | 52,826 |
2026 to 2028 |  | 12,186 |  |  | — |  |  | 12,560 |  |  | 24,746 |
2029 to 2031 |  | — |  |  | 767 |  |  | 32,849 |  |  | 33,616 |
2032 to 2034 |  | 394 |  |  | 822 |  |  | — |  |  | 1,216 |
2035 to 2037 |  | 6,739 |  |  | 2,491 |  |  | 3,838 |  |  | 13,068 |
Thereafter |  | 437,683 |  |  | 80,613 |  |  | 488,897 |  |  | 1,007,193 |
|  | $ | 504,648 |  |  | $ | 84,805 |  |  | $ | 564,774 |  |  | $ | 1,154,227 |
(1)The total amount of NOL carryforwards that will not be available to offset our future taxable income after the dividends paid deduction due to Section 382 limitations was $56.7 million for federal. (2)In certain jurisdictions, the net operating loss carryforwards can only be used to offset a percentage of taxable income in a given year. (3)If certain substantial changes in the entity's ownership occur or have determined to have occurred, there may be a limitation on the amount of the carryforwards that can be utilized. As of December 31, 2021, we had tax credit carryforwards of $7.2 million, which expire, if not utilized, from 2022 to 2031. We also had capital losses of $8.0 million, which can be carried forward indefinitely. The beginning and ending balances of our unrecognized tax benefits are reconciled below for the years ended December 31 (in thousands):
| 2021 |  | 2020 |  | 2019
Beginning balance | $ | 207,759 |  |  | $ | 173,726 |  |  | $ | 150,930 |
Gross increases related to prior year tax positions | 4,547 |  |  | 14,732 |  |  | — |
Gross decreases related to prior year tax positions | (58,356) |  |  | — |  |  | (1,160) |
Gross increases related to current year tax positions | 10,000 |  |  | 29,149 |  |  | 31,332 |
Decreases resulting from expiration of statute of limitation | (10,561) |  |  | (6,518) |  |  | (2,112) |
Decreases resulting from settlements | (5,089) |  |  | (3,330) |  |  | (5,264) |
Ending balance | $ | 148,300 |  |  | $ | 207,759 |  |  | $ | 173,726 |
We recognize interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. We accrued $13.6 million, $21.3 million, and $14.2 million for interest and penalties as of December 31, 2021, 2020 and 2019, respectively. The unrecognized tax benefits of $148.3 million as of December 31, 2021, of which $3.4 million is subject to an indemnification agreement, if subsequently recognized, will affect our effective tax rate favorably at the time when such a benefit is recognized. Due to various tax years open for examination and the ongoing tax audits and inquiries by the tax authorities in different jurisdictions, it is reasonably possible that the balance of unrecognized tax benefits could significantly increase or decrease over the next 12 months as we may be subject to either examination by tax authorities, tax audit settlements, or a lapse in statute of limitations. We are currently unable to estimate the range of possible adjustments to the balance of unrecognized tax benefits. In general, our income tax returns for the years from 2018 through the current year remain open to examination by federal and state taxing authorities. In addition, our tax years of 2005 through current year remain open and subject to examination by local tax authorities in certain foreign jurisdictions in which we have major operations.

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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