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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 and loss from equity method investment consisted of the following (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Domestic | $ | 567.7 |  |  | $ | 490.6 |  |  | $ | 371.7 |
Foreign | 60.7 |  |  | 51.1 |  |  | 14.3 |
Total income before income taxes and loss from equity method investment | $ | 628.4 |  |  | $ | 541.7 |  |  | $ | 386.0 |
The provision for (benefit from) income taxes consisted of the following (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 80.7 |  |  | $ | 38.6 |  |  | $ | 11.0 |
State | 2.5 |  |  | 8.1 |  |  | 0.1 |
Foreign | 23.3 |  |  | 13.6 |  |  | 11.4 |
Total current | $ | 106.5 |  |  | $ | 60.3 |  |  | $ | 22.5 |
Deferred: |  |  |  |  |
Federal | $ | (90.2) |  |  | $ | (8.1) |  |  | $ | 40.6 |
State | (1.1) |  |  | (0.8) |  |  | (6.0) |
Foreign | (1.1) |  |  | 1.8 |  |  | (2.8) |
Total deferred | (92.4) |  |  | (7.1) |  |  | 31.8 |
Provision for income taxes | $ | 14.1 |  |  | $ | 53.2 |  |  | $ | 54.3 |
The foreign tax provision included the tax impacts from U.S. GAAP to local tax return book to tax differences and return to provision adjustments that create a permanent addback including but not limited to stock compensation, meals and entertainment, and settlement of prior year tax audits with foreign jurisdiction adjustments. The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate as follows (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Tax at federal statutory tax rate | $ | 132.0 |  |  | $ | 113.8 |  |  | $ | 81.2 |
Foreign income taxed at different rates | 2.9 |  |  | 16.4 |  |  | 12.3 |
Foreign withholding taxes | 37.4 |  |  | 18.8 |  |  | 16.0 |
Stock-based compensation expense | (74.8) |  |  | (39.6) |  |  | (30.6) |
Foreign tax credit | (53.2) |  |  | (30.1) |  |  | (30.4) |
State taxes—net of federal benefit | (4.6) |  |  | 4.9 |  |  | (11.3) |
Research and development credit | (11.1) |  |  | (7.5) |  |  | (6.8) |
Valuation allowance | 20.0 |  |  | 11.9 |  |  | 22.0 |
Impact of the 2017 Tax Act: |  |  |  |  |
One-time transition tax | 5.8 |  |  | 2.6 |  |  | (2.1) |
Foreign-Derived Intangible Income | (33.6) |  |  | (44.3) |  |  | — |
Other | (6.7) |  |  | 6.3 |  |  | 4.0 |
Total provision for income taxes | $ | 14.1 |  |  | $ | 53.2 |  |  | $ | 54.3 |
On September 29, 2020, the U.S. Treasury and the IRS released final regulations related to foreign tax credits that were the subject of proposed regulations issued in December 2019 and proposed certain provisions in proposed regulations issued in December 2019. The final and proposed regulations provide administrative guidance for the foreign tax credit regime, which was updated in the 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”). Generally, the provisions that were included in the 2019 proposed regulations apply to taxable years ended on or after December 16, 2019, except as otherwise specified. On December 28, 2021, the U.S. Treasury and the IRS released final regulations addressing various aspects of the foreign tax credit regime. These final regulations did not have a material impact on our consolidated financial statements. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets as of the years ended are presented below (in millions):
| December 31, 2021 |  | December 31, 2020
Deferred tax assets: |  |  |
General business credit carryforward | $ | 63.5 |  |  | $ | 48.9 |
Deferred revenue | 276.5 |  |  | 216.4 |
Reserves and accruals | 59.5 |  |  | 41.9 |
Net operating loss carryforward | 22.2 |  |  | 23.4 |
Stock-based compensation expense | 18.3 |  |  | 17.5 |
Depreciation and amortization | 17.0 |  |  | 6.3 |
Capitalized research expenditures | 64.2 |  |  | 16.6 |
Operating lease liabilities | 13.1 |  |  | 11.6 |
Total deferred tax assets | 534.3 |  |  | 382.6 |
Less: Valuation allowance | (75.0) |  |  | (54.9) |
Deferred tax assets, net of valuation allowance | 459.3 |  |  | 327.7 |
Deferred tax liabilities: |  |  |
Deferred contract costs | (97.4) |  |  | (74.0) |
Operating lease ROU assets | (11.9) |  |  | (10.8) |
Acquired intangibles | (15.7) |  |  | (5.7) |
Total deferred tax liabilities | (125.0) |  |  | (90.5) |
Net deferred tax assets | $ | 334.3 |  |  | $ | 237.2 |
As of December 31, 2021, we had a deferred tax asset of $342.3 million and a deferred tax liability of $7.9 million. In assessing the realizability of deferred tax assets, we considered whether it is more likely than not that some portion or all of our deferred tax assets will be realized. This realization is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We concluded that it is more likely than not that we will be able to realize the benefits of our deferred tax assets in the future except for our California research and development (“R&D”) credits carryforward, certain impairment losses in business investments, certain foreign tax credits from foreign disregarded entities and certain tax attributes from business acquisitions. We believe that it is more likely than not that the deferred tax assets for California R&D credits, impairment losses, foreign tax credits from foreign disregarded entities and acquired foreign tax attributes will not be realized. As of December 31, 2021, we had a valuation allowance of $75.0 million against deferred tax assets for California R&D credits carryforwards (net of the unrecognized tax benefits), impairment losses, certain foreign tax credits and certain acquired tax attributes. As of December 31, 2021, our federal and California net operating loss carryforwards for income tax purposes were $78.4 million and $20.8 million, respectively. All the net operating loss carryforwards were from acquisitions which were limited by Section 382 of the Internal Revenue Code. If not utilized, the federal net operating loss carryforwards will begin to expire in 2022, and California net operating loss carryforwards will begin to expire in 2034. As of December 31, 2021, we had state tax credit carryforwards of $41.0 million. The state credits can be carried forward indefinitely. Under the 2017 Tax Act, starting on January 1, 2018, we are no longer subject to federal income tax on earnings remitted from our foreign subsidiaries. We have analyzed our global working capital and cash requirements and the potential tax liabilities attributable to repatriation, and have determined that we will be repatriating certain unremitted foreign earnings which was previously deemed indefinitely reinvested. For those investments from which we were able to make a reasonable estimate of the tax effects of such repatriation, we have recorded a provisional estimate for withholding and state taxes. For those investments from which we were not able to make a reasonable estimate, we have not recorded any deferred taxes. We operated under a tax incentive agreement in Singapore, which was effective through December 31, 2020. The tax incentive agreement was conditional upon our meeting certain employment and investment thresholds. As of December 31, 2021, we had $73.3 million of unrecognized tax benefits, of which, if recognized, $65.5 million would favorably affect our effective tax rate. Our policy is to include accrued interest and penalties related to uncertain tax benefits in income tax expense. As of December 31, 2021, 2020 and 2019, accrued interest and penalties were $13.3 million, $14.5 million and $14.1 million, respectively. The aggregate changes in the balance of unrecognized tax benefits are as follows (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Unrecognized tax benefits, beginning of year | $ | 77.3 |  |  | $ | 67.5 |  |  | $ | 63.5 |
Gross increases for tax positions related to the current year | 7.6 |  |  | 13.1 |  |  | 11.4 |
Gross decreases for tax positions related to the current year | — |  |  | — |  |  | — |
Gross increases for tax positions related to the prior year | 8.7 |  |  | 6.1 |  |  | 3.0 |
Gross decreases for tax positions related to prior year | (0.7) |  |  | (1.3) |  |  | (0.3) |
Gross decreases for tax positions related to prior year audit settlements | — |  |  | (1.4) |  |  | (1.7) |
Gross decreases for tax positions related to expiration of statute of limitations | (19.6) |  |  | (6.7) |  |  | (8.4) |
Unrecognized tax benefits, end of year | $ | 73.3 |  |  | $ | 77.3 |  |  | $ | 67.5 |
We recorded a net decrease of gross unrecognized tax benefits of approximately $4.0 million during the year ended December 31, 2021. The net decrease was primarily due to the reversal of gross unrecognized tax benefits in connection with the lapse of statutes of limitations. As of December 31, 2021, 2020 and 2019, $79.5 million, $90.3 million and $82.8 million, respectively, of the amounts reflected above were recorded as income tax liabilities—non-current in our consolidated balance sheets. It is reasonably possible that our gross unrecognized tax benefits will decrease by up to $18.5 million in the next 12 months, primarily due to the lapse of the statute of limitations. These adjustments, if recognized, would favorably impact our effective tax rate, and would be recognized as additional tax benefits. We file income tax returns in the U.S. federal jurisdiction and in various U.S. state and foreign jurisdictions. Generally, we are no longer subject to examination by U.S federal income tax authorities for tax years prior to 2015. We are no longer subject to U.S. state and foreign income tax examinations by tax authorities for tax years prior to 2010. We currently have ongoing tax audits in the United Kingdom, Canada, Germany and several other foreign jurisdictions. The focus of these audits is the inter-company profit allocation.

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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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