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INCOME TAX | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAX | INCOME TAX The income tax provision (benefit) for the years ended December 31, 2018 and 2017, the 2016 fiscal transition period and the year ended May 31, 2016 consisted of the following:
| Year Ended December 31, |  | Seven Months Ended December 31, |  | Year Ended May 31,
| 2018 |  | 2017 |  | 2016 |  | 2016
| (in thousands)
Current income tax provision (benefit): |  |  |  |  |  |  |
Federal | $ | (20,984 | ) |  | $ | 79,903 |  |  | $ | 22,859 |  |  | $ | 26,493 |
State | 21,122 |  |  | 3,468 |  |  | 3,443 |  |  | 5,454 |
Foreign | 79,320 |  |  | 67,851 |  |  | 42,681 |  |  | 56,689 |
| 79,458 |  |  | 151,222 |  |  | 68,983 |  |  | 88,636 |
Deferred income tax provision (benefit): |  |  |  |  |  |  |
Federal | (8,760 | ) |  | (266,869 | ) |  | (36,447 | ) |  | (18,205 | )
State | (1,684 | ) |  | 9,678 |  |  | (1,842 | ) |  | (3,620 | )
Foreign | 8,474 |  |  | 4,582 |  |  | 4,967 |  |  | 3,884 |
| (1,970 | ) |  | (252,609 | ) |  | (33,322 | ) |  | (17,941 | )
| $ | 77,488 |  |  | $ | (101,387 | ) |  | $ | 35,661 |  |  | $ | 70,695 |
The income tax provision allocated to noncontrolling interests was $10.6 million and $8.6 million for the years ended December 31, 2018 and 2017, $4.4 million for the 2016 fiscal transition period and $7.3 million for the year ended May 31, 2016. The following table presents income (loss) before income taxes for the years ended December 31, 2018 and 2017, the 2016 fiscal transition period and the year ended May 31, 2016:
| Year Ended December 31, |  | Seven Months Ended December 31, |  | Year Ended May 31,
| 2018 |  | 2017 |  | 2016 |  | 2016
| (in thousands)
United States | $ | 131,067 |  |  | $ | 29,692 |  |  | $ | (55,279 | ) |  | $ | 59,876 |
Foreign | 431,089 |  |  | 362,991 |  |  | 228,623 |  |  | 301,036 |
| $ | 562,156 |  |  | $ | 392,683 |  |  | $ | 173,344 |  |  | $ | 360,912 |
On December 22, 2017, the United States enacted the 2017 U.S. Tax Act, which resulted in numerous changes, including a reduction in the U.S. federal tax rate from 35% to 21% effective January 1, 2018 and the transition of the U.S. federal tax system to a territorial regime. As part of this transition, the 2017 U.S. Tax Act imposed a one-time mandatory "transition" tax on foreign earnings not previously subjected to U.S. income tax. Following the guidance in SAB 118, w e made reasonable estimates of the effects of the 2017 U.S. Tax Act on our existing deferred tax balances and the one-time transition tax. For these items, which are further described below, we recognized a provisional net income tax benefit of $158.7 million, which was included as a component of income tax benefit in our consolidated statement of income for the year ended December 31, 2017. We remeasured our U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse, which is now 21% instead of 35% and recorded a provisional income tax benefit of $222.4 million for the year ended December 31, 2017. The one-time transition tax established by the 2017 U.S. Tax Act is based on our total post-1986 foreign earnings and profits, offset by allowable foreign tax credits. The transition tax rate applied to our foreign earnings is based on the amount of those earnings held in cash and cash equivalents, as well as other assets. For the year ended December 31, 2017, we recorded a provisional income tax expense of $63.7 million for the transition tax on our previously deferred foreign earnings. During 2018, we continued to analyze other provisions of the 2017 U.S. Tax Act, including the effects on our foreign tax pools and resulting foreign tax credits, and reduced our estimated transition tax liability to $40.4 million, which resulted in an income tax benefit of $23.3 million. As of December 31, 2018, we have completed our accounting for the transition effects of the 2017 U.S. Tax Act. Approximately $18 million of our undistributed foreign earnings are considered to be indefinitely reinvested outside the United States as of December 31, 2018. Because those earnings are considered to be indefinitely reinvested, no deferred income taxes have been provided thereon. If we were to make a distribution of any portion of those earnings in the form of dividends or otherwise, any such amounts would be subject to withholding taxes payable to various foreign jurisdictions; however, the amounts would not be subject to any additional U.S. income tax. Our effective tax rates for periods presented differ from the federal statutory rate for the years ended December 31, 2018 and 2017, the 2016 fiscal transition period and the year ended May 31, 2016 as follows:
| Year Ended December 31, |  | Seven Months Ended December 31, |  | Year Ended May 31,
| 2018 |  | 2017 |  | 2016 |  | 2016
Federal U.S. statutory rate | 21.0 | % |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal income tax benefit | 2.7 |  |  | 1.9 |  |  | 0.6 |  |  | 0.4 |
Foreign income taxes (primarily U.K.) | (0.5 | ) |  | (12.0 | ) |  | (12.6 | ) |  | (10.1 | )
Foreign interest income not subject to tax | (1.7 | ) |  | (2.2 | ) |  | (2.3 | ) |  | (2.6 | )
Federal U.S. transition tax | (4.1 | ) |  | 16.2 |  |  | — |  |  | — |
Federal U.S. rate reduction | — |  |  | (55.6 | ) |  | — |  |  | — |
Other SAB 118 adjustments | (0.6 | ) |  | — |  |  | — |  |  | — |
Share-based compensation expense | (2.1 | ) |  | (4.2 | ) |  | — |  |  | — |
Foreign-derived intangible income deduction | (1.6 | ) |  | — |  |  | — |  |  | — |
Taxes on unremitted earnings | — |  |  | — |  |  | — |  |  | (3.5 | )
Valuation allowance | 1.4 |  |  | (3.2 | ) |  | — |  |  | — |
Other | (0.7 | ) |  | (1.7 | ) |  | (0.1 | ) |  | 0.4 |
Effective tax rate | 13.8 | % |  | (25.8 | )% |  | 20.6 | % |  | 19.6 | %
Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates. Deferred income taxes as of December 31, 2018 and 2017 reflect the effect of temporary differences between the amounts of assets and liabilities for financial accounting and income tax purposes. As of December 31, 2018 and 2017, principal components of deferred tax items were as follows:
| 2018 |  | 2017
| (in thousands)
Deferred income tax assets: |  |  |
Basis difference - U.K. business | $ | 4,890 |  |  | $ | 8,961 |
Domestic net operating loss carryforwards | 20,096 |  |  | 17,228 |
Foreign net operating loss carryforwards | 10,833 |  |  | 3,819 |
Share-based compensation expense | 11,333 |  |  | 7,856 |
Accrued expenses | 35,913 |  |  | 34,582 |
Other | 16,906 |  |  | 18,502 |
| 99,971 |  |  | 90,948 |
Less valuation allowance | (23,390 | ) |  | (16,550 | )
| 76,581 |  |  | 74,398 |
Deferred tax liabilities: |  |  |
Acquired intangibles | 522,636 |  |  | 410,563 |
Property and equipment | 102,654 |  |  | 77,481 |
Other | 28,188 |  |  | 10,087 |
| 653,478 |  |  | 498,131 |
Net deferred income tax liability | $ | (576,897 | ) |  | $ | (423,733 | )
The net deferred income taxes reflected on our consolidated balance sheets as of December 31, 2018 and 2017 are as follows:
| 2018 |  | 2017
| (in thousands)
Noncurrent deferred income tax asset | $ | 8,128 |  |  | $ | 13,146 |
Noncurrent deferred income tax liability | (585,025 | ) |  | (436,879 | )
Net deferred income tax liability | $ | (576,897 | ) |  | $ | (423,733 | )
A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Changes to our valuation allowance during the years ended December 31, 2018 and 2017, the 2016 fiscal transition period and the year ended May 31, 2016 are summarized below (in thousands):
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 | )
Allowance for foreign net operating loss carryforwards | (6,469 | )
Allowance for domestic net operating loss carryforwards | (3,793 | )
Allowance for state credit carryforwards | (685 | )
Rate change on domestic net operating loss and capital loss carryforwards | 3,868 |
Utilization of foreign income tax credit carryforward | 7,140 |
Balance at December 31, 2017 | (16,550 | )
Allowance for foreign net operating loss carryforwards | (7,979 | )
Allowance for domestic net operating loss carryforwards | 1,145 |
Allowance for state credit carryforwards | (6 | )
Balance at December 31, 2018 | $ | (23,390 | )
The increase in the valuation allowance related to foreign net operating loss carryforwards of $8.0 million for the year ended December 31, 2018. The increase in the valuation allowance of $10.3 million for the year ended December 31, 2017 relates primarily to carryforward assets recorded as part of the acquisition of ACTIVE Network. The increase in the valuation allowance related to domestic net operating loss carryforwards of $1.5 million and $4.5 million for the 2016 fiscal transition period and the year ended May 31, 2016, respectively, relates to acquired carryforwards from the merger with Heartland. Foreign net operating loss carryforwards of $68.3 million and domestic net operating loss carryforwards of $38.6 million at December 31, 2018 will expire between December 31, 2026 and December 31, 2038 if not utilized. We conduct business globally and file income tax returns in the domestic federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities around the world. We are no longer subjected to state income tax examinations for fiscal years ended on or before May 31, 2008, U.S. federal income tax examinations for fiscal ended on or before May 31, 2013 and U.K. federal income tax examinations for fiscal years ended on or before May 31, 2014. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the years ended December 31, 2018 and 2017, the 2016 fiscal transition period and the year ended May 31, 2016 is as follows:
| Year Ended December 31, |  | Seven Months Ended December 31, |  | Year Ended May 31,
| 2018 |  | 2017 |  | 2016 |  | 2016
| (in thousands)
Balance at the beginning of the year | $ | 31,218 |  |  | $ | 17,916 |  |  | $ | 7,803 |  |  | $ | 2,559 |
Additions based on income tax positions related to the current year | — |  |  | 7,537 |  |  | 4,626 |  |  | 287 |
Additions related to acquisition | — |  |  | 13,061 |  |  | 6,149 |  |  | 6,151 |
Additions for income tax positions of prior years | — |  |  | 411 |  |  | 247 |  |  | 753 |
Effect of foreign currency fluctuations on income tax positions | — |  |  | 27 |  |  | (3 | ) |  | 2 |
Reductions for income tax positions of prior years | (10,021 | ) |  | (7,285 | ) |  | (906 | ) |  | (123 | )
Settlements with income tax authorities | — |  |  | (449 | ) |  | — |  |  | (1,826 | )
Balance at the end of the year | $ | 21,197 |  |  | $ | 31,218 |  |  | $ | 17,916 |  |  | $ | 7,803 |
As of December 31, 2018, the total amount of gross unrecognized income tax benefits that, if recognized, would affect the provision for income taxes is $21.2 million.

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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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