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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. The Tax Cuts and Jobs Act changes several aspects of US federal tax law including: reducing the US corporate income tax rate from 35% to 21% beginning on January 1, 2018; establishing a territorial tax system, which includes a one-time tax on the deemed mandatory repatriation of the Company’s international operations’ unremitted earnings which have not been subject to US tax; imposing a minimum US tax on foreign earnings; providing for the immediate expensing of certain qualified property; and changing the tax treatment of performance based executive compensation and certain employee fringe benefits. US GAAP requires the income tax effects of the Tax Cuts and Jobs Act to be accounted for in the period of enactment. As of December 31, 2017, the Company has not completed its accounting for the income tax effects of the Tax Cuts and Jobs Act; however, it has recorded provisional amounts for the impact of revaluing the deferred tax assets and liabilities, the deemed mandatory repatriation tax on the Company’s international operations’ unremitted earnings which have not been subject to US tax and the state income tax effects related to the change in federal tax law. The Company recorded an income tax benefit of $96 million to reflect the impact of revaluing US deferred tax assets and liabilities to 21%, which is the rate the Company expects the deferred tax assets and liabilities to reverse. The Company has recorded additional federal income tax expense of $20 million to reflect the deemed mandatory repatriation tax on the Company’s international operations’ unremitted earnings which have not been subject to US tax. The mandatory repatriation tax generated excess foreign tax credits of approximately $14 million, which are available for carryforward. The Company does not expect to utilize the foreign tax credits carryforwards prior to their expiration and it has recorded a $14 million valuation allowance against the foreign tax carryforwards. The Company has recorded additional tax expense of less than $1 million for the state income tax impact of the Tax Cuts and Jobs Act. As the Company completes its analysis and refines its calculations of the federal and state income tax impact of the Tax Cuts and Jobs Act, it may need to adjust the measurement of the deferred tax assets and liabilities, update the historical earnings of its UK and Canadian operations which will impact the mandatory repatriation tax, foreign tax credit utilization, carryforwards and valuation allowance, and adjust the state income tax expense. Income before income taxes was taxed under the following jurisdictions:
|  | Years Ended December 31,
(in millions) |  | 2017 |  | 2016 |  | 2015
Domestic |  | $ | 607.1 |  |  | $ | 635.5 |  |  | $ | 626.4 |
Foreign |  | 53.2 |  |  | 36.9 |  |  | 20.6 |
Total |  | $ | 660.3 |  |  | $ | 672.4 |  |  | $ | 647.0 |
Components of Income tax expense (benefit) consist of the following:
|  | Years Ended December 31,
(in millions) |  | 2017 |  | 2016 |  | 2015
Current: |  |  |  |  |  |
Federal |  | $ | 258.9 |  |  | $ | 295.7 |  |  | $ | 258.5 |
State |  | 29.8 |  |  | 34.9 |  |  | 28.6 |
Foreign |  | 21.3 |  |  | 16.8 |  |  | 10.1 |
Total current |  | 310.0 |  |  | 347.4 |  |  | 297.2 |
Deferred: |  |  |  |  |  |
Domestic |  | (168.0 | ) |  | (90.5 | ) |  | (48.5 | )
Foreign |  | (4.7 | ) |  | (8.9 | ) |  | (4.8 | )
Total deferred |  | (172.7 | ) |  | (99.4 | ) |  | (53.3 | )
Income tax expense |  | $ | 137.3 |  |  | $ | 248.0 |  |  | $ | 243.9 |
The reconciliation between the statutory tax rate expressed as a percentage of income before income taxes and the effective tax rate is as follows:
|  | Years Ended December 31,
(dollars in millions) |  | 2017 |  | 2016 |  | 2015
Statutory federal income tax rate |  | $ | 231.1 |  |  | 35.0 | % |  | $ | 235.4 |  |  | 35.0 | % |  | $ | 226.4 |  |  | 35.0 | %
State taxes, net of federal effect(1) |  | 18.3 |  |  | 2.8 |  |  | 17.8 |  |  | 2.6 |  |  | 16.5 |  |  | 2.6 |
Excess tax benefit of equity awards |  | (36.2 | ) |  | (5.5 | ) |  | (1.6 | ) |  | (0.2 | ) |  | — |  |  | — |
Effect of rates different than statutory |  | (6.3 | ) |  | (1.0 | ) |  | (4.5 | ) |  | (0.7 | ) |  | (1.9 | ) |  | (0.3 | )
Foreign withholding tax |  | 1.0 |  |  | 0.2 |  |  | 0.8 |  |  | 0.1 |  |  | 3.3 |  |  | 0.5 |
Effect of UK tax rate change on deferred taxes |  | — |  |  | — |  |  | (1.5 | ) |  | (0.2 | ) |  | (4.0 | ) |  | (0.6 | )
Effect of US Tax Cuts and Jobs Act on Deferred Taxes and Mandatory Repatriation Tax |  | (75.5 | ) |  | (11.4 | ) |  | — |  |  | — |  |  | — |  |  | — |
Other |  | 4.9 |  |  | 0.7 |  |  | 1.6 |  |  | 0.3 |  |  | 3.6 |  |  | 0.5 |
Effective tax rate |  | $ | 137.3 |  |  | 20.8 | % |  | $ | 248.0 |  |  | 36.9 | % |  | $ | 243.9 |  |  | 37.7 | %
(1) | The impact of state taxes on excess tax benefits of equity awards and the US Tax Cuts and Jobs Act are presented on the respective separate lines in the effective tax rate reconciliation.
The tax effect of temporary differences that give rise to the net deferred income tax liabilities is presented below:
|  | December 31,
(in millions) |  | 2017 |  | 2016
Deferred tax assets: |  |  |  |
Equity compensation plans |  | $ | 18.7 |  |  | $ | 29.2 |
Payroll and benefits |  | 8.0 |  |  | 22.7 |
Deferred interest |  | 6.8 |  |  | 13.9 |
Net operating loss and credit carryforwards, net |  | 28.1 |  |  | 12.7 |
Rent |  | 7.4 |  |  | 11.0 |
Accounts receivable |  | 5.4 |  |  | 8.3 |
Other |  | 8.0 |  |  | 6.2 |
Trade credits |  | 1.5 |  |  | 0.6 |
Total deferred tax assets |  | 83.9 |  |  | 104.6 |
Deferred tax liabilities: |  |  |  |
Software and intangibles |  | 194.5 |  |  | 337.4 |
Deferred income |  | 18.6 |  |  | 58.3 |
International investments |  | 19.2 |  |  | 31.3 |
Property and equipment |  | 20.4 |  |  | 30.3 |
Other |  | 12.0 |  |  | 15.3 |
Total deferred tax liabilities |  | 264.7 |  |  | 472.6 |
Deferred tax asset valuation allowance |  | 15.5 |  |  | 1.2 |
Net deferred tax liabilities |  | $ | 196.3 |  |  | $ | 369.2 |
The Company has state and international income tax net operating losses of $29 million, which will expire at various dates from 2025 through 2032 and state and international tax credit carryforwards of $28 million, which expire at various dates from 2019 through 2027. Due to the nature of the CDW UK acquisition, the Company has provided US income taxes of $19 million on the excess of the financial reporting value of the investment over the corresponding tax basis. As the Company continues to evaluate the Tax Cuts and Jobs Act, the Company has made a provisional determination that it is indefinitely reinvested in its UK business, and therefore will not provide for any deferred US taxes on the earnings of the UK business. The Company has also made a provisional determination that it is not permanently reinvested in its Canadian business and therefore has recognized deferred tax liabilities of $3 million as of December 31, 2017 related to withholding taxes on earnings of its Canadian business. In the ordinary course of business, the Company is subject to review by domestic and foreign taxing authorities, including the Internal Revenue Service (“IRS”). In general, the Company is no longer subject to audit by the IRS for tax years through 2013 and state, local or foreign taxing authorities for tax years through 2012. Various other taxing authorities are in the process of auditing income tax returns of the Company and its subsidiaries. The Company does not anticipate that any adjustments from the audits would have a material impact on its consolidated financial position, results of operations or cash flows.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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