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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, eliminating certain deductions including the domestic manufacturing deduction, providing additional limitations on deductions for executive compensation, imposing a mandatory one-time transition tax on accumulated earnings from certain foreign subsidiaries and creating new taxes on certain foreign sourced earnings. The Tax Act also extended the option to claim accelerated depreciation deductions by allowing companies to fully deduct qualified property in the year such property is placed in service. We estimated the enactment date effects of the Tax Act and recorded provisional amounts in our 2017 consolidated financial statements in accordance with Staff Accounting Bulletin No. 118. As a result of the reduction of the U.S. corporate tax rate to 21%, U.S. generally accepted accounting principles required a re-measurement of our deferred tax assets and liabilities as of the date of enactment. As such, the Company’s net federal and state deferred tax liability balances were reduced by approximately $39.3 million, which was recorded as a reduction of income tax expense in the Company’s Consolidated Statements of Operations for the year ended December 31, 2017. We finalized our accounting for the income tax effects of the Tax Act during 2018 with an insignificant impact. As part of such analysis, the Company has concluded that it is not subject to the one-time transition tax referenced above. We will continue to monitor for potential future changes in certain state and local tax regulations resulting from the Tax Act which may have an impact on our consolidated income tax provision. For the years ended December 31, 2018, 2017 and 2016, our income tax provision was calculated based on income from continuing operations before income taxes as follows: (in thousands):
| 2018 |  | 2017 |  | 2016
United States | $ | 375,408 |  |  | $ | 303,854 |  |  | $ | 283,904 |
Foreign | 19,620 |  |  | 14,895 |  |  | 12,590 |
| $ | 395,028 |  |  | $ | 318,749 |  |  | $ | 296,494 |
The income tax provision in the accompanying Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016 consisted of the following (in thousands):
| 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
Federal provision | $ | 75,405 |  |  | $ | 120,317 |  |  | $ | 95,171 |
State and local provisions | 28,063 |  |  | 23,496 |  |  | 23,387 |
Foreign provision | 1,389 |  |  | 244 |  |  | 749 |
| 104,857 |  |  | 144,057 |  |  | 119,307 |
Deferred | 4,249 |  |  | (53,358 | ) |  | (8,108 | )
| $ | 109,106 |  |  | $ | 90,699 |  |  | $ | 111,199 |
Our 2018 income tax provision from continuing operations was $109.1 million compared to $90.7 million for 2017 and $111.2 million for 2016. The increase in the 2018 income tax provision compared to 2017 was primarily due to increased income before income taxes. The decrease in the 2017 income tax provision compared to 2016 was predominantly due to the revaluation of the Company’s net deferred tax liability balances as discussed above, partially offset by increased income before income taxes. The actual income tax rates on income from continuing operations before income taxes, less amounts attributable to noncontrolling interests, for the years ended December 31, 2018, 2017 and 2016, were 27.6%, 28.5% and 37.5%, respectively. The decrease in the 2018 actual income tax rate compared to 2017 and the decrease in the 2017 actual income tax rate compared to 2016 were due to the net impact of the Tax Act on each period, including the reduction of the U.S. federal corporate tax rate from 35% to 21% in 2018 and the reduction in income tax expense associated with the re-measurement of our net deferred tax liability balance in 2017. Items accounting for the differences between income taxes computed at the federal statutory rate and the income tax provision for the years ended December 31, 2018, 2017 and 2016 were as follows (in thousands):
| 2018 |  | 2017 |  | 2016
Federal income taxes at the statutory rate | $ | 82,946 |  |  | $ | 111,562 |  |  | $ | 103,773 |
State and local income taxes, net of federal tax benefits | 21,827 |  |  | 15,736 |  |  | 14,801 |
State tax reserves | (7 | ) |  | (2,543 | ) |  | 74 |
Permanent differences | 6,584 |  |  | 4,916 |  |  | 3,698 |
Domestic manufacturing deduction | — |  |  | (10,387 | ) |  | (6,830 | )
Excess tax benefit from share-based compensation | (1,227 | ) |  | (1,341 | ) |  | (2,114 | )
Goodwill impairment | — |  |  | 17,055 |  |  | — |
Foreign income taxes (including UK statutory rate changes) | 70 |  |  | (2,586 | ) |  | (1,290 | )
Impact of federal rate change on net deferred tax liabilities | — |  |  | (39,343 | ) |  | — |
Federal tax reserves | (67 | ) |  | (1,247 | ) |  | (893 | )
Other | (1,020 | ) |  | (1,123 | ) |  | (20 | )
| $ | 109,106 |  |  | $ | 90,699 |  |  | $ | 111,199 |
Our income tax provision for the year ended December 31, 2018 included $0.6 million for the minimum tax on global intangible low-taxed income for certain earnings of our foreign subsidiaries, as required under the Tax Act. The Company has elected to recognize such tax as an expense in the period incurred. As of December 31, 2018, we had undistributed foreign earnings from certain foreign subsidiaries of approximately $54.6 million. Based on our evaluation, and given that a significant portion of such earnings were subject to tax in prior periods or are indefinitely reinvested, we have concluded that any taxes associated with the repatriation of such foreign earnings would be immaterial. As of December 31, 2018, the amount of cash held by these foreign subsidiaries was approximately $60.6 million which, if repatriated, should not result in any federal or state income taxes. Tax benefits are recognized only if it is “more likely than not” that the tax position would be sustained on its technical merits. The amount recognized is the largest amount of the tax benefit that is greater than 50% likely of being realized on examination, with a tax examination being presumed to occur. For positions not meeting the “more likely than not” test, no tax benefit is recognized. As of December 31, 2018 and 2017, the amount of unrecognized income tax benefits was zero and $0.8 million, respectively. A reconciliation of unrecognized income tax benefits at the beginning and at the end of the year is as follows (in thousands):
| 2018 |  | 2017
Balance at beginning of year | $ | 841 |  |  | $ | 3,982 |
Additions based on tax positions related to the current year | — |  |  | 1,158 |
Additions based on tax positions related to prior years | — |  |  | 1,244 |
Adjustments for tax positions of prior years | 184 |  |  | (5,543 | )
Reductions for expired statute of limitations | (1,025 | ) |  | — |
Balance at end of year | $ | — |  |  | $ | 841 |
We report interest expense and/or interest income related to unrecognized tax benefits in the income tax provision. As of December 31, 2018 and 2017, respectively, we had approximately zero and $0.1 million of accrued interest expense related to unrecognized income tax benefits included as a liability in the Consolidated Balance Sheets. For the years ended December 31, 2018 and 2017, less than $0.1 million of interest expense was recognized in the income tax provision. In addition, for the years ended December 31, 2018 and 2017, respectively, approximately $0.1 million and $0.5 million of interest income was recognized in the income tax provision. We do not anticipate any significant changes to our reserves for uncertain tax positions in the next twelve months. We file income tax returns with the Internal Revenue Service and various state, local and foreign tax agencies. The Company is currently under examination by various taxing authorities for the years 2014 through 2017. During the first quarter of 2017, the Company settled an examination with a taxing authority which resulted in a $3.3 million reversal of reserves for previously uncertain tax positions. Deferred income tax assets and liabilities are recognized in the Consolidated Balance Sheets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The deferred income tax assets and deferred income tax liabilities recorded for the years ended December 31, 2018 and 2017 were as follows (in thousands):
| 2018 |  | 2017
Deferred income tax assets: |  |  |
Excess of amounts expensed for financial statement purposes over amounts deducted for income tax purposes: |  |  |
Insurance liabilities | $ | 44,192 |  |  | $ | 42,425 |
Pension liability | 3,204 |  |  | 6,900 |
Deferred compensation | 29,300 |  |  | 27,742 |
Other (including liabilities and reserves) | 27,400 |  |  | 28,534 |
Total deferred income tax assets | 104,096 |  |  | 105,601 |
Valuation allowance for deferred tax assets | (3,855 | ) |  | (3,825 | )
Net deferred income tax assets | 100,241 |  |  | 101,776 |
Deferred income tax liabilities: |  |  |
Costs capitalized for financial statement purposes and deducted for income tax purposes: |  |  |
Goodwill and identifiable intangible assets | (152,761 | ) |  | (150,900 | )
Depreciation of property, plant and equipment | (14,904 | ) |  | (11,781 | )
Other | (3,424 | ) |  | (3,792 | )
Total deferred income tax liabilities | (171,089 | ) |  | (166,473 | )
Net deferred income tax liabilities | $ | (70,848 | ) |  | $ | (64,697 | )
The components of the net deferred income tax liabilities in the accompanying Consolidated Balance Sheets are included in “Other assets” of $4.7 million and $10.0 million and “Other long-term obligations” of $75.5 million and $74.7 million, at December 31, 2018 and 2017, respectively. Valuation allowances are established when necessary to reduce deferred income tax assets when it is more likely than not that a tax benefit will not be realized. We file a consolidated federal income tax return including all of our U.S. subsidiaries. As of December 31, 2018 and 2017, the total valuation allowance on deferred income tax assets was approximately $3.9 million and $3.8 million, respectively, related to state and local net operating losses. Although realization is not assured, we believe it is more likely than not that the deferred income tax assets, net of the valuation allowance discussed above, will be realized. The amount of the deferred income tax assets considered realizable, however, could be reduced if estimates of future income are reduced. At December 31, 2018, we had trading losses for United Kingdom income tax purposes of approximately $4.2 million, which have no expiration date. Such losses are subject to review by the United Kingdom taxing authority. Realization of the deferred income tax assets is dependent on our generating sufficient taxable income. We believe that the deferred income tax assets will be realized through projected future income.

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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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