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Note 13 - Income Taxes | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 13. Income Taxes: Domestic and foreign income before income taxes was as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
U.S. |  | $ | 834.0 |  |  | $ | 553.9 |  |  | $ | 700.2 |
Foreign |  |  | 63.5 |  |  |  | 14.5 |  |  |  | 19.5 |
Total income before income taxes |  | $ | 897.5 |  |  | $ | 568.4 |  |  | $ | 719.7 |
The components of the provision for income taxes for the years ended December 31 were as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 111.0 |  |  | $ | 109.9 |  |  | $ | 69.0 |
State and local |  |  | 23.1 |  |  |  | 21.4 |  |  |  | 22.1 |
Foreign |  |  | 18.9 |  |  |  | 14.6 |  |  |  | 11.1 |
Total current provision for income taxes |  |  | 153.0 |  |  |  | 145.9 |  |  |  | 102.2 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 22.6 |  |  |  | (14.3 | ) |  |  | 27.6 |
State and local |  |  | 7.4 |  |  |  | (0.2 | ) |  |  | 2.8 |
Foreign |  |  | 1.8 |  |  |  | (12.9 | ) |  |  | (11.6 | )
Total deferred provision for income taxes |  |  | 31.8 |  |  |  | (27.4 | ) |  |  | 18.8 |
Provision for income taxes |  | $ | 184.8 |  |  | $ | 118.5 |  |  | $ | 121.0 |
The reconciliation between our effective tax rate and the statutory tax rate is as follows for the years ended December 31:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State and local taxes, net of federal tax benefit |  |  | 2.7 | % |  |  | 2.8 | % |  |  | 2.8 | %
UK legislative rate change impact |  |  | 1.5 | % |  |  | — | % |  |  | — | %
Foreign Derived Intangible Income (FDII) |  |  | (0.8 | )% |  |  | (1.2 | )% |  |  | (0.9 | )%
Stock-based compensation |  |  | (3.7 | )% |  |  | (3.0 | )% |  |  | (5.5 | )%
Earn-outs |  |  | — | % |  |  | 2.0 | % |  |  | 0.1 | %
Other |  |  | (0.1 | )% |  |  | (0.7 | )% |  |  | (0.7 | )%
Effective tax rate |  |  | 20.6 | % |  |  | 20.9 | % |  |  | 16.8 | %
The decrease in the effective tax rate in 2020 compared to 2019 was primarily due to the impact of higher tax benefits from equity compensation in the current period versus the prior period as well as lower nondeductible earn-out expenses in the current period. These benefits were partially offset by the deferred tax impact of the tax rate increase in the United Kingdom that was enacted and recorded in 2020. The tax effects of significant items comprising our deferred tax assets as of December 31 are as follows:
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Employee wages, pension, and other benefits |  | $ | 7.3 |  |  | $ | 13.0 |
ASC 842/Deferred rent |  |  | 10.3 |  |  |  | 7.3 |
Net operating loss carryover |  |  | 22.7 |  |  |  | 28.8 |
Litigation accrual |  |  | 31.3 |  |  |  | 31.2 |
Capital and other unrealized losses |  |  | 1.6 |  |  |  | 1.7 |
Interest expense |  |  | 44.1 |  |  |  | 33.4 |
Other |  |  | 12.2 |  |  |  | 16.4 |
Total |  |  | 129.5 |  |  |  | 131.8 |
Less valuation allowance |  |  | (48.0 | ) |  |  | (46.5 | )
Deferred tax assets |  |  | 81.5 |  |  |  | 85.3 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets and intangible assets |  |  | (445.3 | ) |  |  | (411.0 | )
Commissions |  |  | (16.6 | ) |  |  | (14.3 | )
Other |  |  | (7.4 | ) |  |  | (6.2 | )
Deferred tax liabilities |  |  | (469.3 | ) |  |  | (431.5 | )
Deferred tax liabilities, net |  | $ | (387.8 | ) |  | $ | (346.2 | )
The net deferred tax liabilities of $387.8 million consist primarily of timing differences involving depreciation and amortization. The ultimate realization of the deferred tax assets depends on our ability to generate sufficient taxable income in the future. We have provided a valuation allowance against the deferred tax assets associated with the interest expense deduction limitation in the U.K. We have also provided for a valuation allowance against the deferred tax assets associated with the net operating losses of certain subsidiaries. Our net operating loss carryforwards expire as follows:
Years Ending |  | Amount |
2021 - 2028 |  | $ | 22.7 |
2029 - 2033 |  |  | 20.5 |
2034 - 2040 |  |  | 177.9 |
Total |  | $ | 221.1 |
A valuation allowance has been established based on our evaluation of the likelihood of utilizing these benefits before they expire. We have determined that the generation of future taxable income from certain subsidiaries to fully realize the deferred tax assets is uncertain. Other than these items, we have determined, based on our historical operating performance, that our taxable income will more likely than not be sufficient to fully realize the deferred tax assets. As of December 31, 2020, we have not made a provision for U.S. or additional foreign withholdings taxes for any additional outside basis difference inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. We do not rely on these unremitted earnings as a source of funds for our domestic business as we expect to have sufficient cash flow in the U.S. to fund our U.S. operational and strategic needs. We follow ASC No. 740-10 which prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. For each tax position, we must determine whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is then measured to determine the amount of benefit to recognize within the financial statements. No benefits may be recognized for tax positions that do not meet the more likely than not threshold. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Unrecognized tax benefit as of January 1 |  | $ | 11.5 |  |  | $ | 17.4 |  |  | $ | 16.3 |
Gross increase in tax positions in prior period |  |  | 0.5 |  |  |  | 0.6 |  |  |  | 2.0 |
Gross decrease in tax positions in prior period |  |  | (0.2 | ) |  |  | (3.3 | ) |  |  | (0.1 | )
Settlements |  |  | — |  |  |  | (2.4 | ) |  |  | (0.3 | )
Lapse of statute of limitations |  |  | (1.9 | ) |  |  | (0.8 | ) |  |  | (0.5 | )
Unrecognized tax benefit as of December 31 |  | $ | 9.9 |  |  | $ | 11.5 |  |  | $ | 17.4 |
Of the total unrecognized tax benefits as of December 31, 2020, 2019, and 2018, $8.1 million, $8.6 million, and $14.4 million, respectively, represent the amounts that, if recognized, would have a favorable effect on our effective tax rate in any future periods. The total gross amount of accrued interest and penalties for the years ended December 31, 2020, 2019, and 2018 was $3.9 million, $4.6 million, and $5.7 million, respectively. Our practice is to recognize interest and penalties associated with income taxes as a component of “Provision for income taxes” in our accompanying consolidated statements of operations. We do not expect a significant increase in unrecognized benefits related to federal, state, or foreign tax exposures within the coming year. In addition, we believe that it is reasonably possible that approximately $5.8 million of our currently remaining unrecognized tax positions, each of which is individually insignificant, may be recognized by the end of 2021 as a result of a combination of audit settlements and lapses of statute of limitations, net of additional uncertain tax positions. We are subject to tax in the U.S., various state, and foreign jurisdictions. Joined by our domestic subsidiaries, we file a consolidated income tax return. With a few exceptions, none of which are material to our consolidated financial statements as of December 31, 2020, we are no longer subject to U.S. federal, state and local, or non-US income tax examinations by tax authorities for tax years before 2016. In New Jersey, we are being audited for the years ended December 31, 2013 through 2018 with a statute extension until June 30, 2021. In Massachusetts, we are being audited for the years ended December 31, 2016 through 2018. We do not expect that the results of these examinations will have a material effect on our financial position, results of operations, or cash flow.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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