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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES:
The components of income before income taxes were as follows (in thousands):
 Year Ended December 31,
 202220212020
Income before income taxes:   
Domestic$532,051 $534,302 $632,791 
Foreign171,835 88,599 (61,445)
Total$703,886 $622,901 $571,346 
The components of the provision for income taxes were as follows (in thousands):
 Year Ended December 31,
 202220212020
Current:   
Federal$97,673 $65,273 $134,538 
State29,439 32,930 45,610 
Foreign23,078 6,644 (745)
Total current tax provision150,190 104,847 179,403 
Deferred:
Federal29,657 27,762 (46,251)
State4,225 (2,418)(3,850)
Foreign8,171 727 (9,915)
Total deferred tax provision (benefit)42,053 26,071 (60,016)
Total provision for income taxes$192,243 $130,918 $119,387 
Income taxes related to other (loss) income within other comprehensive income (loss) was a benefit of $0.2 million, an expense of $0.4 million and a benefit of $0.9 million for the years ended December 31, 2022, 2021 and 2020. There was no tax on foreign currency translation adjustment within other comprehensive income (loss) for the years ended December 31, 2022, 2021 and 2020.
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,
202220212020
Provision at the statutory rate$147,816 $130,809 $119,983 
Increases (decreases) resulting from:
State taxes28,320 27,204 31,791 
Valuation allowance on deferred tax assets 23,366 6,107 (31,138)
Tax contingency reserves, net7,939 844 (2,125)
Employee per diems, meals and entertainment6,086 3,569 10,680 
Company-owned life insurance2,917 (6,969)— 
Foreign taxes(638)(9,359)(7,268)
Taxes on certain equity method investments and non-controlling interests(12,886)(8,825)(3,466)
Stock-based compensation(24,066)(21,271)(3,109)
Other13,389 8,809 4,039 
Total provision for income taxes$192,243 $130,918 $119,387 
Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and tax purposes. The tax effects of these temporary differences, representing deferred tax assets and liabilities, result principally from the following (in thousands):
December 31,
20222021
Deferred income tax liabilities:
Property and equipment$(286,950)$(278,303)
Goodwill(129,491)(93,632)
Leased assets(84,870)(76,728)
Retainage(28,773)(32,661)
Total deferred income tax liabilities(530,084)(481,324)
Deferred income tax assets:  
Lease liabilities84,189 76,608 
Other intangible assets73,654 19,110 
Net operating loss carryforwards56,556 78,947 
Stock and incentive compensation55,413 50,772 
Accruals and reserves48,168 66,000 
Tax credits34,413 39,826 
Deferred tax benefits on unrecognized tax positions8,899 10,090 
Equity method investments and non-controlling interests5,878 273 
Other5,849 7,114 
Subtotal373,019 348,740 
Valuation allowance(58,461)(41,308)
Total deferred income tax assets314,558 307,432 
Total net deferred income tax liabilities$(215,526)$(173,892)
The net deferred income tax assets and liabilities comprised the following in the accompanying consolidated balance sheets (in thousands):
 December 31,
 20222021
Deferred income taxes:  
Assets$12,335 $17,206 
Liabilities(227,861)(191,098)
Total net deferred income tax liabilities$(215,526)$(173,892)
The valuation allowances for deferred income tax assets at December 31, 2022, 2021 and 2020 were $58.5 million, $41.3 million and $43.3 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, 2022, 2021 and 2020 were an increase of $17.2 million, a decrease of $1.9 million and a decrease of $60.9 million. The change in valuation allowance during the year ended December 31, 2022 resulted in a $23.3 million increase in tax expense due primarily to $22.7 million in new valuation allowances recorded on unrealized losses on Quanta’s investment in Starry as further described in Note 8. The total valuation allowance increased by $17.2 million from December 31, 2021 to December 31, 2022 primarily as a result of the $22.7 million valuation allowance related to Starry mentioned above, partially offset by a reduction of $4.8 million due to the removal of deferred tax assets that were no longer available to be carried forward to future years for which a valuation allowance had been provided in prior years, as well as currency translation adjustments on previously provided valuation allowances. 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, 2022, Quanta had state and foreign net operating loss carryforwards, the tax effect of which was $57.7 million. These carryforwards will expire as follows: 2023, $0.3 million; 2024, $0.1 million; 2025, $5.5 million; 2026, $1.6 million; 2027, $0.2 million; and $50.0 million thereafter. A valuation allowance of $27.6 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,
 202220212020
Balance at beginning of year$37,737 $33,219 $40,878 
Additions based on tax positions related to the current year11,699 6,881 4,398 
Additions for tax positions of prior years230 2,339 — 
Reductions for tax positions of prior years(407)— (2,410)
Reductions for audit settlements(2,207)— (930)
Reductions resulting from a lapse of the applicable statute
of limitations periods		(5,413)(4,702)(8,717)
Balance at end of year$41,639 $37,737 $33,219 
As of December 31, 2022, the total amount of unrecognized tax benefits relating to uncertain tax positions was $41.6 million, a net increase of $3.9 million from December 31, 2021, which primarily resulted from a $11.7 million increase related to positions expected to be taken in 2022, partially offset by a $2.2 million reduction related to the settlement of audits and a $5.4 million reduction related to the expiration of U.S. federal and state statutes of limitations. For the year ended December 31, 2021, the aggregate increase results 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.
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, 2022
Unrecognized tax benefits$41,639 
Portion that, if recognized, would reduce tax expense and
effective tax rate		39,247 
Accrued interest on unrecognized tax benefits4,334 
Accrued penalties on unrecognized tax benefits1,085 
Reasonably possible reduction to the balance of unrecognized
tax benefits in succeeding 12 months
$0 to $12,122
Portion that, if recognized, would reduce tax expense and
effective tax rate
$0 to $11,699
Quanta classifies interest and penalties within the provision for income taxes. Quanta recognized interest expense of $0.5 million, interest income of $0.8 million and interest income of $0.7 million in the provision for income taxes for the years ended December 31, 2022, 2021 and 2020. Quanta’s consolidated federal income tax returns for tax years 2017, 2018, 2019, 2020 and 2021 remain open to examination by the IRS, as the applicable 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.