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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES We have been organized and have operated as a REIT effective beginning with our taxable year that ended on December 31, 2014. As a REIT, we are generally permitted to deduct from our federal taxable income the dividends we pay to our stockholders. The income represented by such dividends is not subject to federal taxation at the entity level but is taxed, if at all, at the stockholder level. The income of our domestic TRSs, which hold our domestic operations that may not be REIT-compliant as currently operated and structured, is subject, as applicable, to federal and state corporate income tax. In addition, we and our subsidiaries continue to be subject to foreign income taxes in other jurisdictions in which we have business operations or a taxable presence, regardless of whether assets are held or operations are conducted through subsidiaries disregarded for federal income tax purposes or TRSs. We will also be subject to a separate corporate income tax on any gains recognized on the sale or disposition of any asset previously owned by a C corporation during a five-year period after the date we first owned the asset as a REIT asset that are attributable to "built-in gains" with respect to that asset on that date. We will also be subject to a built-in gains tax on our depreciation recapture recognized into income as a result of accounting method changes in connection with our acquisition activities. If we fail to remain qualified for taxation as a REIT, we will be subject to federal income tax at regular corporate income tax rates. Even if we remain qualified for taxation as a REIT, we may be subject to some federal, state, local and foreign taxes on our income and property in addition to taxes owed with respect to our TRS operations. In particular, while state income tax regimes often parallel the federal income tax regime for REITs, many states do not completely follow federal rules and some do not follow them at all. The significant components of our deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022 are presented below:
| DECEMBER 31,
| 2023(1) |  | 2022
Deferred Tax Assets: |  |  |
Accrued liabilities and other adjustments | $ | 100,476 |  |  | $ | 80,159 |
Net operating loss carryforwards | 158,363 |  |  | 97,161 |
Valuation allowance | (103,897) |  |  | (47,514) |
| 154,942 |  |  | 129,806 |
Deferred Tax Liabilities: |  |  |
Other assets, principally due to differences in amortization | (220,218) |  |  | (243,150) |
Plant and equipment, principally due to differences in depreciation | (90,156) |  |  | (78,486) |
Other | (65,909) |  |  | (52,786) |
| (376,283) |  |  | (374,422) |
Net deferred tax liability | $ | (221,341) |  |  | $ | (244,616) |
(1)Prior to 2023, certain of our non-United States tax loss carryforwards were determined to have a remote possibility of realization and therefore were not reported in the table above. In connection with the implementation of the OECD (as defined below) global minimum tax initiative known as Pillar Two (as defined below), any existing deferred taxes not disclosed in our 2023 financial statements will not be available in the future to reduce tax otherwise due under Pillar Two. Accordingly, beginning in 2023, we are disclosing in the above table the tax effects of these non-United States tax loss carryforwards offset with a full valuation allowance. The deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022 are presented below:
| DECEMBER 31,
| 2023 |  | 2022
Noncurrent deferred tax assets (Included in Other, a component of Other assets, net) | $ | 14,069 |  |  | $ | 18,389 |
Deferred income taxes | (235,410) |  |  | (263,005) |
At December 31, 2023, we have federal net operating loss carryforwards of $109,624, which can be carried forward indefinitely, of which $88,728 is expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $133,536, with various expiration dates (and in some cases no expiration date), subject to a valuation allowance of approximately 73.8%. If actual results differ unfavorably from certain of our estimates used, we may not be able to realize all or part of our net deferred income tax assets and additional valuation allowances may be required. Although we believe our estimates are reasonable, no assurance can be given that our estimates reflected in the tax provisions and accruals will equal our actual results. These differences could have a material impact on our income tax provision and operating results in the period in which such determination is made. A rollforward of the valuation allowance is as follows:
YEAR ENDED DECEMBER 31, |  | BALANCE AT BEGINNING OF THE YEAR |  | CHARGED (CREDITED) TO EXPENSE(2) |  | OTHER INCREASES/(DECREASES)(1)(2) |  | BALANCE AT END OF THE YEAR
2023 |  | $ | 47,514 |  |  | $ | 4,855 |  |  | $ | 51,528 |  |  | $ | 103,897 |
2022 |  | 51,744 |  |  | (1,333) |  |  | (2,897) |  |  | 47,514 |
2021 |  | 46,938 |  |  | 8,406 |  |  | (3,600) |  |  | 51,744 |
(1)Other decreases and increases in valuation allowances are primarily related to changes in foreign currency exchange rates. (2)Prior to 2023, certain of our non-United States tax loss carryforwards were determined to have a remote possibility of realization and therefore were not reported in the table above. In connection with the implementation of the OECD global minimum tax initiative known as Pillar Two, any existing deferred taxes not disclosed in our 2023 financial statements will not be available in the future to reduce tax otherwise due under Pillar Two. Accordingly, beginning in 2023, we are disclosing in the above table the tax effects of these non-United States tax loss carryforwards offset with a full valuation allowance. The components of net income (loss) before provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021 are as follows:
| YEAR ENDED DECEMBER 31,
| 2023 |  | 2022 |  | 2021
United States | $ | 76,012 |  |  | $ | 449,241 |  |  | $ | 212,460 |
Canada | 111,331 |  |  | 103,826 |  |  | 78,780 |
Other Foreign | 39,863 |  |  | 78,571 |  |  | 337,775 |
Net income (loss) before provision (benefit) for income taxes | $ | 227,206 |  |  | $ | 631,638 |  |  | $ | 629,015 |
The provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021 consist of the following components:
| YEAR ENDED DECEMBER 31,
| 2023 |  | 2022 |  | 2021
Federal—current | $ | 1,255 |  |  | $ | 24,331 |  |  | $ | 54,867 |
Federal—deferred | (18,488) |  |  | (30,581) |  |  | 14,322 |
State—current | 1,544 |  |  | 8,553 |  |  | 9,566 |
State—deferred | (4,630) |  |  | (3,728) |  |  | (526) |
Foreign—current | 72,408 |  |  | 92,525 |  |  | 83,154 |
Foreign—deferred | (12,146) |  |  | (21,611) |  |  | 14,907 |
Provision (Benefit) for Income Taxes | $ | 39,943 |  |  | $ | 69,489 |  |  | $ | 176,290 |
A reconciliation of total income tax expense and the amount computed by applying the current federal statutory tax rate of 21.0% to net income (loss) before provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021, respectively, is as follows:
| YEAR ENDED DECEMBER 31,
| 2023 |  | 2022 |  | 2021
Computed "expected" tax provision | $ | 47,713 |  |  | $ | 132,644 |  |  | $ | 132,093 |
Changes in income taxes resulting from: |  |  |  |  |
Tax adjustment relating to REIT | (39,299) |  |  | (82,620) |  |  | (8,203) |
State taxes, net of federal tax benefit | (3,147) |  |  | 4,043 |  |  | 8,027 |
Increase (decrease) in valuation allowance (net of operating losses) | 4,855 |  |  | (1,333) |  |  | 8,406 |
Withholding taxes | 11,658 |  |  | 10,600 |  |  | 23,654 |
(Reversal) reserve accrual and audit settlements, net of federal tax benefit | (6,999) |  |  | 40 |  |  | 3,072 |
Change in valuation of acquisition contingencies | 3,242 |  |  | (19,656) |  |  | — |
Foreign tax rate differential | 6,876 |  |  | 22,227 |  |  | 9,856 |
Disallowed foreign interest, Subpart F income, and other foreign taxes | 14,405 |  |  | 2,820 |  |  | (3,437) |
Other, net | 639 |  |  | 724 |  |  | 2,822 |
Provision (Benefit) for Income Taxes | $ | 39,943 |  |  | $ | 69,489 |  |  | $ | 176,290 |
Our effective tax rates for the years ended December 31, 2023, 2022 and 2021 were 17.6%, 11.0% and 28.0%, respectively. Our effective tax rate is subject to variability in the future due to, among other items: (i) changes in the mix of income between our QRSs and our TRSs, as well as among the jurisdictions in which we operate, (ii) tax law changes, (iii) volatility in foreign exchange gains and losses, (iv) the timing of the establishment and reversal of tax reserves, (v) our ability to utilize net operating losses that we generate and (vi) the taxability or deductibility of significant transactions. The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate were:
YEAR ENDED DECEMBER 31,
2023 | 2022 | 2021
The benefits derived from the dividends paid deduction of $39,299 and the differences in the tax rates to which our foreign earnings are subject of $6,876. In addition, there were gains and losses recorded in Other expense (income), net during the period, for which there was no tax impact. | The benefits derived from the dividends paid deduction of $82,620 and the differences in the tax rates to which our foreign earnings are subject of $22,227. In addition, there were gains and losses recorded in Other expense (income), net and Gain (loss) on disposal/write-down of property, plant and equipment, net during the period for which there were insignificant tax impacts. | The benefits derived from the dividends paid deduction of $8,203 which was offset by (i) the impact of differences in the tax rates at which our foreign earnings are subject to, resulting in a tax provision of $9,856, and (ii) foreign withholding taxes of $23,654, which were either paid during the year or accrued, for the deferred tax liability for the United States tax impact of undistributed earnings of foreign TRSs that are no longer intended to be permanently reinvested outside the United States.
As a REIT, we are entitled to a deduction for dividends paid, resulting in a substantial reduction of federal income tax expense. As a REIT, substantially all of our income tax expense will be incurred based on the earnings generated by our foreign subsidiaries and our domestic TRSs. During 2021, as a result of the enactment of a tax law and the closing of various acquisitions, we concluded that it is no longer our intention to reinvest our undistributed earnings of our foreign TRSs indefinitely outside the United States. As a REIT, future repatriation of incremental undistributed earnings of our foreign subsidiaries will not be subject to federal or state income tax, with the exception of foreign withholding taxes. However, such future repatriations may require distributions to our stockholders in accordance with REIT distribution rules, and any such distribution may then be taxable, as appropriate, at the stockholder level. We expect to provide for foreign withholding taxes on the current and future earnings of all of our foreign subsidiaries as the result of such reassessment. The Organization for Economic Co-operation and Development (the "OECD"), an international association comprised of 38 countries, including the United States, has issued proposals that change long-standing tax principles, including on a global minimum tax initiative. In December 2022, the European Union member states agreed to implement the OECD’s Base Erosion and Profit Shifting 2.0 Pillar Two global corporate minimum tax rate of 15% ("Pillar Two"). The agreement affirms that all member states must adopt the directive by December 31, 2023. The rules will therefore be first applicable for periods beginning after December 31, 2023. While the United States has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation. Considering we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules are not expected to materially impact our effective tax rate, corporate tax liabilities or cash tax liabilities. There remains uncertainty as to the final Pillar Two model rules. We will continue to monitor United States and global legislative action related to Pillar Two for potential impacts. The evaluation of an uncertain tax position is a two-step process. The first step is a recognition process whereby we determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is a measurement process whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We have elected to recognize interest and penalties associated with uncertain tax positions as a component of the provision (benefit) for income taxes in the accompanying Consolidated Statements of Operations. We recorded a decrease of $2,557 and increases of $90 and $823 for gross interest and penalties for the years ended December 31, 2023, 2022 and 2021, respectively. We had $4,183 and $6,635 accrued for the payment of interest and penalties as of December 31, 2023 and 2022, respectively. A summary of tax years that remain subject to examination by major tax jurisdictions is as follows:
TAX YEARS |  | TAX JURISDICTION
See Below |  | United States—Federal and State
2020 to present |  | United Kingdom
2016 to present |  | Canada
The normal statute of limitations for United States federal tax purposes is three years from the date the tax return is filed; however, the statute of limitations may remain open for periods longer than three years in instances where a federal tax examination is in progress. The 2022, 2021 and 2020 tax years remain subject to examination for United States federal tax purposes as well as net operating loss carryforwards utilized in these years. The normal statute of limitations for state purposes is between three to five years. However, certain of our state statute of limitations remain open for periods longer than this when audits are in progress. We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. As of December 31, 2023, we had $23,570 of reserves related to uncertain tax positions, of which $20,488 and $3,082 is included in other long-term liabilities and deferred income taxes, respectively, in the accompanying Consolidated Balance Sheet. As of December 31, 2022, we had $27,753 of reserves related to uncertain tax positions, of which $24,671 and $3,082 is included in other long-term liabilities and deferred income taxes, respectively, in the accompanying Consolidated Balance Sheet. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes to our estimates. A rollforward of unrecognized tax benefits is as follows:
Gross tax contingencies—January 1, 2021 | $ | 25,969 |
Gross additions based on tax positions related to the current year | 3,893 |
Gross additions for tax positions of prior years | 344 |
Gross reductions for tax positions of prior years | (536) |
Lapses of statutes | (1,663) |
Settlements | (235) |
Gross tax contingencies—December 31, 2021 | 27,772 |
Gross additions based on tax positions related to the current year | 2,271 |
Gross additions for tax positions of prior years | 723 |
Gross reductions for tax positions of prior years | (1,866) |
Acquired unrecognized tax benefits | 1,354 |
Lapses of statutes | (2,501) |
Gross tax contingencies—December 31, 2022 | 27,753 |
Gross additions based on tax positions related to the current year | 3,511 |
Gross additions for tax positions of prior years | 634 |
Gross reductions for tax positions of prior years | (5,454) |
Lapses of statutes | (2,874) |
Gross tax contingencies—December 31, 2023 | $ | 23,570 |
The reversal of the reserves of $23,570 as of December 31, 2023 will be recorded as a reduction of our income tax provision, if sustained. We believe that it is reasonably possible that an amount up to approximately $3,722 of our unrecognized tax positions may be recognized by the end of 2024 as a result of a lapse of statute of limitations or upon closing and settling significant audits in various worldwide jurisdictions.

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