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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES:
U.S. federal and state and foreign income tax laws and regulations are voluminous and often ambiguous. As such, Quanta is required to make many subjective assumptions and judgments regarding its tax positions that could materially affect amounts recognized in its future consolidated balance sheets, statements of operations and statements of comprehensive income.
The components of income before income taxes were as follows (in thousands):
 Year Ended December 31,
 202120202019
Income before income taxes:   
Domestic$534,302 $632,791 $550,676 
Foreign88,599 (61,445)21,611 
Total$622,901 $571,346 $572,287 
The components of the provision for income taxes were as follows (in thousands):
 Year Ended December 31,
 202120202019
Current:   
Federal$65,273 $134,538 $121,214 
State32,930 45,610 35,329 
Foreign6,644 (745)16,848 
Total current tax provision104,847 179,403 173,391 
Deferred:
Federal27,762 (46,251)7,379 
State(2,418)(3,850)(1,776)
Foreign727 (9,915)(13,522)
Total deferred tax provision (benefit)26,071 (60,016)(7,919)
Total provision for income taxes$130,918 $119,387 $165,472 
The actual income tax provision differed from the income tax provision computed by applying the U.S. federal statutory corporate rate to income before provision for income taxes as follows (in thousands):
Year Ended December 31,
202120202019
Provision at the statutory rate$130,809 $119,983 $120,180 
Increases (decreases) resulting from —
State taxes27,204 31,791 23,399 
Valuation allowance on deferred tax assets 6,107 (31,138)35,761 
Employee per diems, meals and entertainment3,569 10,680 13,817 
Contingency reserves, net844 (2,125)(3,173)
Company-owned life insurance(6,969)— — 
Taxes on joint ventures(8,825)(3,466)(930)
Foreign taxes(9,359)(7,268)(21,565)
Stock-based compensation(21,271)(3,109)(1,863)
Other8,809 4,039 (154)
Total provision for income taxes$130,918 $119,387 $165,472 
Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and tax purposes. The tax effects of these temporary differences, representing deferred tax assets and liabilities, result principally from the following (in thousands):
December 31,
20212020
Deferred income tax liabilities:
Property and equipment$(278,303)$(236,256)
Goodwill(93,632)(85,467)
Leased assets(76,728)(77,344)
Customer holdbacks(32,661)(30,457)
Other intangible assets— (4,438)
Total deferred income tax liabilities(481,324)(433,962)
Deferred income tax assets:  
Net operating loss carryforwards78,947 82,817 
Lease liabilities76,608 76,826 
Accruals and reserves65,852 70,335 
Stock and incentive compensation50,772 36,590 
Tax credits39,826 42,202 
Other intangible assets19,110 — 
Deferred tax benefits on unrecognized tax positions10,090 10,108 
Other7,535 9,617 
Subtotal348,740 328,495 
Valuation allowance(41,308)(43,255)
Total deferred income tax assets307,432 285,240 
Total net deferred income tax liabilities$(173,892)$(148,722)
The net deferred income tax assets and liabilities comprised the following in the accompanying consolidated balance sheets (in thousands):
 December 31,
 20212020
Deferred income taxes:  
Assets$17,206 $17,685 
Liabilities(191,098)(166,407)
Total net deferred income tax liabilities$(173,892)$(148,722)
The valuation allowances for deferred income tax assets at December 31, 2021, 2020 and 2019 were $41.3 million, $43.3 million and $104.2 million. These valuation allowances relate to state and foreign net operating loss carryforwards and foreign tax credits. The net changes in the total valuation allowance for each of the years ended December 31, 2021, 2020 and 2019 were a decrease of $1.9 million, a decrease of $60.9 million and an increase of $36.6 million. The change in valuation allowance during the year ended December 31, 2021 resulted in a $6.1 million increase in tax expense due to approximately $8.5 million of new valuation allowances primarily recorded on foreign net operating losses, which was partially offset by a $2.4 million valuation allowance release recorded due to the completion of certain internal restructuring efforts that increased management’s visibility into future utilization of certain state net operation losses. The total valuation allowance was reduced by $1.9 million from December 31, 2020 to December 31, 2021 as a result of a reduction of $8.0 million due to the expiration of certain net operating losses, for which a valuation allowance had previously been recorded, as well as currency translation adjustments on previously recorded valuation allowances, offset by an increase to the valuation allowance as a result of the $6.1 million of new valuation allowances as noted above. The change in valuation allowance during the year ended December 31, 2020 resulted in a $31.1 million reduction in tax expense, primarily due to a release of $45.1 million of valuation allowance on foreign tax credits due to the completion of an internal financial reorganization, which was partially offset by the establishment of $14.0 million of new valuation allowances on deferred tax assets generated during the year ended December 31, 2020. The
total change in valuation allowance for the year ended December 31, 2020 was a $60.9 million reduction, primarily due to the removal of approximately $29.4 million of foreign net operating losses that were no longer eligible to be carried forward as well as the $31.1 million reduction noted above. The valuation allowances were established primarily as a result of uncertainty in Quanta’s outlook as to the amount and character of future taxable income in particular tax jurisdictions. Quanta believes it is more likely than not that it will realize the benefit of its deferred tax assets net of existing valuation allowances.
At December 31, 2021, Quanta had state and foreign net operating loss carryforwards, the tax effect of which was $80.0 million. These carryforwards will expire as follows: 2022, $0.2 million; 2023, $0.7 million; 2024, $0.1 million; 2025, $6.2 million; 2026, $0.4 million; and $72.4 million thereafter. A valuation allowance of $40.0 million has been recorded against certain foreign and state net operating loss carryforwards.
Quanta generally does not provide for taxes related to undistributed earnings of its foreign subsidiaries because such earnings either would not be taxable when remitted or they are considered to be indefinitely reinvested. Quanta could also be subject to additional foreign withholding taxes if it were to repatriate cash that is indefinitely reinvested outside the United States, but it does not expect such amount to be material.
A reconciliation of unrecognized tax benefit balances is as follows (in thousands):
 December 31,
 202120202019
Balance at beginning of year$33,219 $40,878 $41,110 
Additions based on tax positions related to the current year6,881 4,398 7,708 
Additions for tax positions of prior years2,339 — 1,200 
Reductions for tax positions of prior years— (2,410)— 
Reductions for audit settlements— (930)(3,205)
Reductions resulting from a lapse of the applicable statute
of limitations periods		(4,702)(8,717)(5,935)
Balance at end of year$37,737 $33,219 $40,878 
As of December 31, 2021, the total amount of unrecognized tax benefits relating to uncertain tax positions was $37.7 million, an increase of $4.5 million from December 31, 2020. This aggregate increase resulted primarily from reserves for uncertain tax positions taken in 2021. For the year ended December 31, 2020, the $12.1 million of aggregate reductions were primarily due to the favorable settlement of U.S. and Canadian tax audits and the expiration of U.S. federal and state statutes of limitations. For the year ended December 31, 2019, the $9.1 million of aggregate reductions were primarily due to the favorable settlement of certain non-U.S. income tax obligations of an acquired business and the expiration of U.S. state income tax statutes of limitations.
The balances of unrecognized tax benefits, the amount of related interest and penalties and what Quanta believes to be the range of reasonably possible changes in the next 12 months are as follows (in thousands):
 December 31,
 202120202019
Unrecognized tax benefits$37,737 $33,219 $40,878 
Portion that, if recognized, would reduce tax expense and
effective tax rate		34,967 30,868 40,695 
Accrued interest on unrecognized tax benefits4,369 5,204 6,240 
Accrued penalties on unrecognized tax benefits1,587 14 14 
Reasonably possible reduction to the balance of unrecognized
tax benefits in succeeding 12 months
$0 to $8,098
$0 to $11,859
$0 to $6,268
Portion that, if recognized, would reduce tax expense and
effective tax rate
$0 to $7,277
$0 to $10,217
$0 to $5,693
Quanta classifies interest and penalties within the provision for income taxes. Quanta recognized interest income of $0.8 million, interest income of $0.7 million and interest expense of $0.8 million in the provision for income taxes for the years ended December 31, 2021, 2020 and 2019.
Quanta’s consolidated federal income tax return for tax year 2019 is currently under examination by the Internal Revenue Service (IRS), and Quanta’s consolidated federal income tax returns for tax years 2017, 2018, and 2020 remain open to
examination by the IRS, as these statute of limitations periods have not yet expired. Additionally, various state and foreign tax returns filed by Quanta and certain subsidiaries for multiple periods remain under examination by various U.S. state and foreign tax authorities. Quanta does not consider any state in which it does business to be a major tax jurisdiction.