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Income Taxes | 12 Months Ended
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Dec. 31, 2019
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 made 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. In 2018, we finalized our accounting for the income tax effects of the Tax Act, for which we had previously recorded provisional amounts in our 2017 consolidated financial statements in accordance with Staff Accounting Bulletin No. 118. During the year ended December 31, 2017, our 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, as U.S. generally accepted accounting principles required a re-measurement of our deferred tax assets and liabilities as of the date of enactment. We 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 in future periods. For the years ended December 31, 2019, 2018, and 2017, our income tax provision was calculated based on income from continuing operations before income taxes as follows (in thousands):
| 2019 |  | 2018 |  | 2017
United States | $ | 430,253 |  |  | $ | 375,408 |  |  | $ | 303,854 |
Foreign | 20,636 |  |  | 19,620 |  |  | 14,895 |
| $ | 450,889 |  |  | $ | 395,028 |  |  | $ | 318,749 |
The income tax provision in the accompanying Consolidated Statements of Operations for the years ended December 31, 2019, 2018, and 2017 consisted of the following (in thousands):
| 2019 |  | 2018 |  | 2017
Current provision: |  |  |  |  |
Federal | $ | 89,264 |  |  | $ | 75,405 |  |  | $ | 120,317 |
State and local | 31,099 |  |  | 28,063 |  |  | 23,496 |
Foreign | 3,685 |  |  | 1,389 |  |  | 244 |
| 124,048 |  |  | 104,857 |  |  | 144,057 |
Deferred provision (benefit) | 1,701 |  |  | 4,249 |  |  | (53,358 | )
| $ | 125,749 |  |  | $ | 109,106 |  |  | $ | 90,699 |
Our 2019 income tax provision from continuing operations was $125.7 million compared to $109.1 million for 2018 and $90.7 million for 2017. The increase in the income tax provision for each year was primarily driven by increased income from continuing operations 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, 2019, 2018, and 2017, were 27.9%, 27.6%, and 28.5%, respectively. The increase in the 2019 actual income tax rate compared to 2018 was predominantly due to: (a) an increase in our state deferred tax rate, partially as a result of a change in the mix of income, and (b) the continued application of the Tax Act, including the application of guidance regarding certain permanent differences and other nondeductible expenses. The decrease in the 2018 actual income tax rate compared to 2017 was due to the net impact of the Tax Act, including the reduction of the U.S. federal corporate tax rate from 35% to 21% in 2018, partially offset by 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, 2019, 2018, and 2017 were as follows (in thousands):
| 2019 |  | 2018 |  | 2017
Federal income taxes at the statutory rate | $ | 94,687 |  |  | $ | 82,946 |  |  | $ | 111,562 |
State and local income taxes, net of federal tax benefits | 24,904 |  |  | 21,827 |  |  | 15,736 |
State tax reserves | — |  |  | (7 | ) |  | (2,543 | )
Permanent differences | 7,149 |  |  | 6,584 |  |  | 4,916 |
Domestic manufacturing deduction | — |  |  | — |  |  | (10,387 | )
Excess tax benefit from share-based compensation | (733 | ) |  | (1,227 | ) |  | (1,341 | )
Goodwill impairment | — |  |  | — |  |  | 17,055 |
Foreign income taxes (including UK statutory rate changes) | (170 | ) |  | 70 |  |  | (2,586 | )
Impact of federal rate change on net deferred tax liabilities | — |  |  | — |  |  | (39,343 | )
Federal tax reserves | — |  |  | (67 | ) |  | (1,247 | )
Other | (88 | ) |  | (1,020 | ) |  | (1,123 | )
| $ | 125,749 |  |  | $ | 109,106 |  |  | $ | 90,699 |
Our income tax provision for the year ended December 31, 2019 and 2018 included $0.1 million and $0.6 million, respectively, 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, 2019, we had undistributed foreign earnings from certain foreign subsidiaries of approximately $69.8 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, 2019, the amount of cash held by these foreign subsidiaries was approximately $67.7 million which, if repatriated, should not result in any federal or state income taxes. Tax benefits associated with uncertain tax positions are recognized only if it is “more likely than not” that the tax position would be sustained on its technical merits. For positions not meeting the “more likely than not” test, no tax benefit is recognized. As of December 31, 2019 and 2018, we had no unrecognized income tax benefits. We file a consolidated federal income tax return including all of our U.S. subsidiaries with the Internal Revenue Service. We additionally file income tax returns with various state, local, and foreign tax agencies. The Company is currently under examination by various taxing authorities for the years 2014 through 2018. 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, 2019 and 2018 were as follows (in thousands):
| 2019 |  | 2018
Deferred income tax assets: |  |  |
Excess of amounts expensed for financial statement purposes over amounts deducted for income tax purposes: |  |  |
Insurance liabilities | $ | 47,022 |  |  | $ | 44,192 |
Pension liability | 2,733 |  |  | 3,204 |
Operating lease liabilities (1) | 68,158 |  |  | — |
Deferred compensation | 32,685 |  |  | 29,300 |
Other (including liabilities and reserves) | 25,647 |  |  | 27,400 |
Total deferred income tax assets | 176,245 |  |  | 104,096 |
Valuation allowance for deferred tax assets | (3,463 | ) |  | (3,855 | )
Net deferred income tax assets | 172,782 |  |  | 100,241 |
Deferred income tax liabilities: |  |  |
Costs capitalized for financial statement purposes and deducted for income tax purposes: |  |  |
Goodwill and identifiable intangible assets | (156,604 | ) |  | (152,761 | )
Operating lease right-of-use assets (1) | (65,090 | ) |  | — |
Depreciation of property, plant and equipment | (18,622 | ) |  | (14,904 | )
Other | (4,212 | ) |  | (3,424 | )
Total deferred income tax liabilities | (244,528 | ) |  | (171,089 | )
Net deferred income tax liabilities | $ | (71,746 | ) |  | $ | (70,848 | )
_________________
(1) | As discussed in Note 2 - Summary of Significant Accounting Policies of the notes to consolidated financial statements, on January 1, 2019, we adopted the accounting pronouncement issued by the Financial Accounting Standards Board (“FASB”), which required lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. We adopted this pronouncement utilizing the transition practical expedient added by the FASB, which eliminated the requirement that entities apply the new lease standard to the comparative periods presented in the year of adoption.
The components of the net deferred income tax liabilities in the accompanying Consolidated Balance Sheets are included in “Other assets” in the amount of $3.4 million and $4.7 million and “Other long-term obligations” in the amount of $75.2 million and $75.5 million, at December 31, 2019 and 2018, 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. As of December 31, 2019 and 2018, the total valuation allowance on deferred income tax assets was approximately $3.5 million and $3.9 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, 2019, there are no longer any trading losses available for United Kingdom income tax purposes. At December 31, 2018, we had trading losses for United Kingdom income tax purposes of approximately $4.2 million, which were utilized in 2019 and are subject to review by the United Kingdom taxing authority. Realization of our deferred income tax assets is dependent on our generating sufficient taxable income in the jurisdictions in which such deferred tax assets will reverse. We believe that our 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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