XML 47 R25.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before provision for income taxes consisted of the following (dollars in thousands):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Domestic | $ | 1,683,710 |  |  | $ | 470,181 |  |  | $ | 839,899 |
Foreign | 725,711 |  |  | 499,788 |  |  | 521,446 |
Total | $ | 2,409,421 |  |  | $ | 969,969 |  |  | $ | 1,361,345 |
Our tax provision (benefit) consisted of the following (dollars in thousands):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Current provision: |  |  |  |  |
Federal | $ | 274,987 |  |  | $ | 18,951 |  |  | $ | (51,980) |
State | 115,196 |  |  | 33,291 |  |  | 52,403 |
Foreign | 238,273 |  |  | 88,994 |  |  | 163,833 |
Total current provision | 628,456 |  |  | 141,236 |  |  | 164,256 |
Deferred provision: |  |  |  |  |
Federal | 34,607 |  |  | 61,034 |  |  | (74,432) |
State | (4,395) |  |  | 3,872 |  |  | (5,760) |
Foreign | (91,162) |  |  | 7,959 |  |  | (14,169) |
Total deferred provision | (60,950) |  |  | 72,865 |  |  | (94,361) |
Total provision for income taxes | $ | 567,506 |  |  | $ | 214,101 |  |  | $ | 69,895 |
The following is a reconciliation stated as a percentage of pre-tax income of the U.S. statutory federal income tax rate to our effective tax rate:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Federal statutory tax rate | 21 | % |  | 21 | % |  | 21 | %
Foreign rate differential | — |  |  | — |  |  | 4 |
State taxes, net of federal benefit | 4 |  |  | 3 |  |  | 3 |
Non-deductible expenses | — |  |  | 1 |  |  | 1 |
Reserves for uncertain tax positions | 1 |  |  | — |  |  | 1 |
Credits and exemptions | (1) |  |  | (2) |  |  | (4) |
Outside basis differences recognized as a result of a legal entity restructuring | — |  |  | — |  |  | (20) |
Other | (1) |  |  | (1) |  |  | (1) |
Effective tax rate | 24 | % |  | 22 | % |  | 5 | %
In the fourth quarter of 2019, we recognized a net tax benefit of approximately $277.2 million attributable to outside basis differences recognized as a result of a legal entity restructuring. The recognition of the outside tax basis differences generated a capital loss that offset capital gains generated during 2019. A portion of the capital loss was carried back to tax years 2016, 2017 and 2018 to offset capital gains in those years. The remaining capital loss was carried forward to tax years 2020 and forward to be utilized to offset capital gains in these years. Based on our strong history of capital gains in the prior years and the nature of our business we expect to generate sufficient capital gains in the remaining three year carry forward period and therefore concluded that it is more likely than not that we will realize the full tax benefit from the capital loss carried forward. Accordingly, we have not provided any valuation allowance against the deferred tax asset for the capital loss carried forward. Cumulative tax effects of temporary differences are shown below (dollars in thousands):
| December 31,
| 2021 |  | 2020
Assets: |  |  |
Tax losses and tax credits | $ | 307,507 |  |  | $ | 334,303 |
Operating lease liabilities | 269,960 |  |  | 358,066 |
Bonus and deferred compensation | 381,408 |  |  | 295,690 |
Bad debt and other reserves | 65,188 |  |  | 73,061 |
Pension obligation | 5,007 |  |  | 18,026 |
All other | 65,710 |  |  | 24,623 |
Deferred tax assets, before valuation allowance | $ | 1,094,781 |  |  | $ | 1,103,769 |
Less: Valuation allowance | (273,256) |  |  | (291,096) |
Deferred tax assets | $ | 821,525 |  |  | $ | 812,673 |
Liabilities: |  |  |
Tax effect on revenue items related to Topic 606 adoption | $ | — |  |  | $ | (16,784) |
Property and equipment | (92,166) |  |  | (88,595) |
Unconsolidated affiliates and partnerships | (128,170) |  |  | (59,544) |
Capitalized costs and intangibles | (583,219) |  |  | (313,099) |
Operating lease assets | (240,261) |  |  | (366,671) |
All other | (25,935) |  |  | (936) |
Deferred tax liabilities | $ | (1,069,751) |  |  | $ | (845,629) |
Net deferred tax liabilities | $ | (248,226) |  |  | $ | (32,956) |
As of December 31, 2021, we had a U.S. federal capital loss carryforward, offset by reserves for uncertain tax position, which will expire after 2024. As of December 31, 2021, there were deferred tax assets before valuation allowances of approximately $299.1 million related to foreign net operating losses (NOLs). The majority of the foreign NOLs carryforward indefinitely. In certain foreign jurisdictions NOLs expire each year beginning in 2021. The utilization of NOLs may be subject to certain limitations under U.S. federal, state and foreign laws. We have recorded a valuation allowance for deferred tax assets where we believe that it is more likely than not that the NOLs will not be utilized. We determined that as of December 31, 2021, $273.3 million of deferred tax assets do not satisfy the realization criteria set forth in Topic 740. Accordingly, a valuation allowance has been recorded for this amount. If released, the entire amount would result in a benefit to continuing operations. During the year ended December 31, 2021, our valuation allowance decreased by approximately $17.8 million. The decrease was attributed to a reversal of the beginning of year valuation allowance of $12.3 million as certain foreign subsidiaries expect to utilize deferred tax assets before expiration as a result of current and forecasted earnings within the applicable jurisdiction, a reduction of $19.5 million due to foreign currency translation and tax rate changes, and an increase in valuation allowance of $14.0 million due to current year activities. We believe it is more likely than not that future operations will generate sufficient taxable income to realize the benefit of our deferred tax assets recorded as of December 31, 2021, net of valuation allowance. At December 31, 2021, we have undistributed earnings of certain foreign subsidiaries of approximately $4.4 billion for which we have indefinitely reinvested and not recognized deferred taxes. Estimating the amount of the unrecognized deferred tax is not practicable due to the complexity and variety of assumptions necessary to estimate the tax. In 2021, following the acquisition of Turner & Townsend, we recorded $20.4 million of deferred tax liability related to book over tax basis difference in Turner & Townsend. The deferred tax liability was offset by an increase to goodwill in purchase accounting and therefore did not impact 2021 income tax expense. The total amount of gross unrecognized tax benefits was approximately $191.9 million and $168.5 million as of December 31, 2021 and 2020, respectively. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $108.5 million as of December 31, 2021. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (dollars in thousands):
| Year Ended December 31,
| 2021 |  | 2020
Beginning balance, unrecognized tax benefits | $ | (168,516) |  |  | $ | (141,164) |
Gross increases - tax positions in prior period | (4,478) |  |  | (31,070) |
Gross decreases - tax positions in prior period | 2,675 |  |  | 1,530 |
Gross increases - current-period tax positions | (25,619) |  |  | (9,688) |
Decreases relating to settlements | 390 |  |  | — |
Reductions as a result of lapse of statute of limitations | 3,610 |  |  | 11,791 |
Foreign exchange movement | — |  |  | 85 |
Ending balance, unrecognized tax benefits | $ | (191,938) |  |  | $ | (168,516) |
Our continuing practice is to recognize accrued interest and/or penalties related to income tax matters within income tax expense. During the years ended December 31, 2021, 2020 and 2019, we accrued an additional $0.6 million, $0.4 million and $0.3 million, respectively, in interest and penalties associated with uncertain tax positions. As of December 31, 2021 and 2020, we have recognized a liability for interest and penalties of $3.8 million and $1.6 million, respectively. We believe the amount of gross unrecognized tax benefits that will be settled during the next twelve months due to filing amended returns and settling ongoing exams cannot be reasonably estimated but will not be significant. We conduct business globally and, as a result, one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and in multiple state, local and foreign tax jurisdictions. Our U.S. federal income tax returns for years 2016 through 2019 are currently under audit by the Internal Revenue Service. We are also under audit by various states and foreign tax jurisdictions including Australia, France, Hungary, Mexico, and Spain. With limited exception, our significant foreign tax jurisdictions are no longer subject to audit by the various tax authorities for tax years prior to 2012.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration