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Income Taxes | 9 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes We use the asset and liability method to determine income taxes on all transactions recorded in the consolidated financial statements. Deferred tax assets (net of valuation allowances) and deferred tax liabilities are presented net by jurisdiction as either a non-current asset or liability in our Condensed Consolidated Balance Sheets, as appropriate. Deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities (i.e., temporary differences) and are measured at the enacted rates that will be in effect when these differences are realized. If necessary, a valuation allowance is established to reduce deferred tax assets to the amount that is more likely than not to be realized. As of September 30, 2018 and December 31, 2017, net deferred tax assets are included in other non-current assets in the Condensed Consolidated Balance Sheets. In order to recognize and measure our unrecognized tax benefits, management determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the recognition thresholds, the position is measured to determine the amount of benefit to be recognized in the consolidated financial statements. Interest and/or penalties related to income tax matters are recognized in income tax expense. The following table shows our income tax provision and effective tax rate:
|  | Three Months Ended September 30, |  | Percentage Change |  | Nine Months Ended September 30, |  | Percentage Change
|  | 2018 |  | 2017 |  |  | 2018 |  | 2017 |
|  | ($ in millions) |  |  |  | ($ in millions) |  |
Income tax provision |  | $ | 46 |  |  | $ | 64 |  |  | (28.1 | )% |  | $ | 234 |  |  | $ | 178 |  |  | 31.5 | %
Effective tax rate |  | 22.0 | % |  | 27.4 | % |  |  |  | 31.8 | % |  | 26.9 | % |  |
The lower effective tax rate in the third quarter of 2018 when compared with the same period in 2017 is primarily due to the reduction of the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, and a decrease in tax expense related to a provisional adjustment due to the remeasurement of our deferred tax assets and liabilities under SEC Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” or SAB 118. These decreases are partially offset by a lower recognition of excess tax benefits associated with the vesting of employee share-based compensation arrangements and previously unrecognized tax benefits associated with positions taken in prior years in the first nine months of 2018 compared to the same period in 2017. The higher effective tax rate in the first nine months of 2018 when compared to the same period in 2017 is primarily due to the reversal of certain Swedish tax benefits recorded in prior periods and the tax expense associated with the sale of the Public Relations Solutions and Digital Media Services businesses. Also, we recorded a lower recognition of excess tax benefits associated with the vesting of employee share-based compensation arrangements and previously unrecognized tax benefits associated with positions taken in prior years in the first nine months of 2018 compared to the same period in 2017. These increases are partially offset by a decrease in tax expense due to the reduction of the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, and a decrease in tax expense related to a provisional adjustment due to the remeasurement of our deferred tax assets and liabilities under SAB 118. The effective tax rate may also vary from period to period depending on, among other factors, the geographic and business mix of earnings and losses. These same and other factors, including history of pre-tax earnings and losses, are taken into account in assessing the ability to realize deferred tax assets. Nasdaq and its eligible subsidiaries file a consolidated U.S. federal income tax return and applicable state and local income tax returns and non-U.S. income tax returns. Federal income tax returns for the years 2008 through 2015 are currently under examination by the Internal Revenue Services and we are subject to examination by the Internal Revenue Service for 2016 and 2017. Several state tax returns are currently under examination by the respective tax authorities for the years 2007 through 2016. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2009 through 2017. Although the results of such examinations may have an impact on our unrecognized tax benefits, we do not anticipate that such impact will be material to our consolidated financial position or results of operations. In addition, we anticipate that the amount of unrecognized tax benefits as of September 30, 2018 will decrease in the next twelve months as we expect to settle certain tax audits. The Swedish Tax Agency has disallowed certain interest expense deductions for the years 2013 - 2016. We appealed to the Lower Administrative Court for the years 2013 - 2015. In the first quarter of 2018, the Lower Administrative Court denied our appeal. We have appealed to the Administrative Court of Appeal. Through March 31, 2018, we had recorded tax benefits of $57 million associated with this matter. We continue to pay all assessments from the Swedish Tax Agency while this matter is pending and have paid $40 million through September 30, 2018. In the second quarter of 2018, the Administrative Court of Appeal decided similar cases against other taxpayers. Although we continue to assert the validity of these interest expense deductions, the decisions of the court lead us to conclude that we can no longer assert that we are more than likely to be successful in our appeal. As such, in the second quarter of 2018, we recorded tax expense of $41 million, or $0.24 per diluted share, which is net of any related U.S. tax benefits and reflects the impact of foreign currency translation. We expect to record future quarterly net tax expense of $1 million related to this matter. The Tax Cuts and Jobs Act was enacted on December 22, 2017 and was effective January 1, 2018. The new legislation contains several key provisions, including a reduction of the U.S. corporate income tax rate from 35% to 21%. We were required to remeasure all of our U.S. deferred tax assets and liabilities as of December 22, 2017 and record the impact of such remeasurement in our 2017 financial statements. For the year ended December 31, 2017, we recorded a decrease to tax expense of $89 million, substantially all of which reflects the estimated impact associated with the remeasurement of our net U.S. deferred tax liability at the lower U.S. federal corporate income tax rate. The Tax Cuts and Jobs Act also imposes a transition tax on unremitted aggregate accumulated earnings of non-U.S. subsidiaries, which did not impact us. SAB 118 has provided guidance which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As of December 31, 2017, we recorded a provisional estimate of the effects of the new legislation. In the first quarter of 2018, we recorded an increase to tax expense of $5 million, which reflects the reduced federal tax benefit associated with state unrecognized tax benefits. In the third quarter of 2018, we recorded a decrease to tax expense of $4 million related to the remeasurement of our deferred tax assets and liabilities as of the enactment date. We will continue to analyze the Tax Cuts and Jobs Act and related accounting guidance and interpretations in order to finalize any impacts within the measurement period. On January 1, 2018, we adopted Topic 220. See “Recent Accounting Pronouncements,” of Note 2, “Basis of Presentation and Principles of Consolidation,” for further discussion of this standard. As a result of the adoption of this standard, in the first quarter of 2018, we recorded a reclassification of $142 million for stranded tax effects related to the Tax Cuts and Jobs Act from accumulated other comprehensive loss to retained earnings within stockholders’ equity in the Condensed Consolidated Balance Sheets. Of the $142 million of stranded tax effects, $135 million relates to the effect on net foreign currency translation gains and losses and $7 million relates to the effect on employee benefit plan adjustment gains and losses.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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