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INCOME TAX (Tables)

7 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes for the 2016 fiscal transition period and the fiscal years ended May 31, 2016, 2015, and 2014 consisted of the following:

	Seven Months Ended December 31,				Year Ended May 31,
	2016				2016				2015				2014
	(in thousands)
Current income tax expense (benefit):
Federal	$	22,859			$	26,493			$	25,022			$	49,178
State	3,443				5,454				3,905				3,856
Foreign	42,681				56,689				(10,346		)		48,075
	68,983				88,636				18,581				101,109
Deferred income tax expense (benefit):
Federal	(36,447		)		(18,205		)		14,822				1,568
State	(1,842		)		(3,620		)		3,606				1,206
Foreign	4,967				3,884				70,986				3,515
	(33,322		)		(17,941		)		89,414				6,289
	$	35,661			$	70,695			$	107,995			$	107,398

Schedule of Income before Income Tax, Domestic and Foreign

The following presents income (loss) before income taxes for the 2016 fiscal transition period and the fiscal years ended May 31, 2016, 2015, and 2014:

	Seven Months Ended December 31,				Year Ended May 31,
	2016				2016				2015				2014
	(in thousands)
United States	$	(55,279	)		$	59,876			$	135,901			$	153,453
Foreign	228,623				301,036				281,209				223,897
	$	173,344			$	360,912			$	417,110			$	377,350

Schedule of Effective Income Tax Rate Reconciliation

Our effective tax rates for periods presented differ from the federal statutory rate for the 2016 fiscal transition period and the fiscal years ended May 31, 2016, 2015, and 2014 as follows:

	Seven Months Ended December 31,			Year Ended May 31,
	2016			2016			2015			2014
Federal U.S. statutory rate	35.0	%		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit	0.6			0.4			1.1			0.9
Foreign income taxes (primarily U.K.)	(12.6	)		(10.1	)		(8.5	)		(7.2	)
Foreign interest income not subject to tax	(2.3	)		(2.6	)		(1.8	)		(2.1	)
Taxes on unremitted earnings	—			(3.5	)		—			—
Tax credits and other	(0.1	)		0.4			1.0			3.1
Effective tax rate attributable to Global Payments	20.6			19.6			26.8			29.7
Effective tax rate allocated to noncontrolling interests	—			—			(0.9	)		(1.2	)
Effective tax rate	20.6	%		19.6	%		25.9	%		28.5	%

Schedule of Deferred Tax Assets and Liabilities

As of December 31, 2016, May 31, 2016 and 2015, principal components of deferred tax items were as follows:

	December 31,				May 31,
	2016				2016				2015
	(in thousands)
Deferred income tax assets:
Basis difference - U.K. business	$	11,145			$	17,831			$	24,520
Domestic net operating loss carryforwards	12,723				14,304				6,927
Foreign income tax credit carryforwards	7,140				7,140				14,172
Foreign net operating loss carryforwards	2,559				3,721				2,330
Share-based compensation expense	11,656				11,677				7,727
Accrued expenses	54,030				42,687				—
Other	9,101				6,483				8,636
	108,354				103,843				64,312
Less valuation allowance	(16,611		)		(15,119		)		(3,823		)
	91,743				88,724				60,489
Deferred tax liabilities:
Acquired intangibles	663,922				721,928				147,239
Property and equipment	86,548				86,969				63,957
Taxes on unremitted earnings	—				—				4,992
Foreign currency translation	—				—				14,659
Other	1,956				1,970				2,069
	752,426				810,867				232,916
Net deferred income tax liability	$	(660,683	)		$	(722,143	)		$	(172,427	)

The net deferred income taxes reflected on our consolidated balance sheets as of December 31, 2016, May 31, 2016 and 2015 are as follows:

	December 31,				May 31,
	2016				2016				2015
	(in thousands)
Noncurrent deferred income tax asset	$	15,789			$	22,719			$	30,428
Noncurrent deferred income tax liability	(676,472		)		(744,862		)		(202,855		)
	$	(660,683	)		$	(722,143	)		$	(172,427	)

Summary of Valuation Allowance

Changes to our valuation allowance during the 2016 fiscal transition period and the fiscal years ended May 31, 2016 and 2015 are summarized below (in thousands):

Balance at May 31, 2014	$	(7,199	)
Utilization of foreign net operating loss carryforwards	3,387
Other	(11		)
Balance at May 31, 2015	(3,823		)
Allowance for foreign income tax credit carryforward	(7,140		)
Allowance for domestic net operating loss carryforwards	(4,474		)
Allowance for domestic net unrealized capital loss	(1,526		)
Release of allowance of domestic capital loss carryforward	1,746
Other	98
Balance at May 31, 2016	(15,119		)
Allowance for domestic net operating loss carryforwards	(1,504		)
Release of allowance of domestic net unrealized capital loss	12
Balance at December 31, 2016	$	(16,611	)

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the 2016 fiscal transition period and the fiscal years ended May 31, 2016, 2015, and 2014 is as follows:

	Seven Months Ended December 31,				Year Ended May 31,
	2016				2016				2015				2014
	(in thousands)
Balance at the beginning of the year	$	7,803			$	2,559			$	67,576			$	53,763
Additions based on income tax positions related to the current year	4,626				287				6,311				8,551
Additions related to acquisition	6,149				6,151				—				—
Additions for income tax positions of prior years	247				753				512				296
Effect of foreign currency fluctuations on income tax positions	(3		)		2				(5,713		)		5,303
Reductions for income tax positions of prior years	(906		)		(123		)		(32		)		(60		)
Settlements with income tax authorities	—				(1,826		)		(504		)		(277		)
Changes in judgment regarding tax position	—				—				(65,591		)		—
Balance at the end of the year	$	17,916			$	7,803			$	2,559			$	67,576

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of the change in unrecognized tax benefits.

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