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INCOME TAX | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAX | INCOME TAX The income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consisted of the following:
| Years Ended December 31,
| 2019 |  | 2018 |  | 2017
| (in thousands)
Current income tax expense (benefit): |  |  |  |  |
Federal | $ | 50,048 |  |  | $ | (20,984 | ) |  | $ | 79,903 |
State | 29,788 |  |  | 21,122 |  |  | 3,468 |
Foreign | 90,895 |  |  | 79,320 |  |  | 67,851 |
| 170,731 |  |  | 79,458 |  |  | 151,222 |
Deferred income tax expense (benefit): |  |  |  |  |
Federal | (79,813 | ) |  | (8,760 | ) |  | (266,869 | )
State | (29,326 | ) |  | (1,684 | ) |  | 9,678 |
Foreign | 598 |  |  | 8,474 |  |  | 4,582 |
| (108,541 | ) |  | (1,970 | ) |  | (252,609 | )
| $ | 62,190 |  |  | $ | 77,488 |  |  | $ | (101,387 | )
Income tax expense allocated to noncontrolling interests was $12.3 million, $10.6 million and $8.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. The following table presents income before income taxes for the years ended December 31, 2019, 2018 and 2017:
| Years Ended December 31,
| 2019 |  | 2018 |  | 2017
| (in thousands)
United States | $ | 60,000 |  |  | $ | 131,067 |  |  | $ | 29,692 |
Foreign | 457,925 |  |  | 431,088 |  |  | 362,991 |
| $ | 517,925 |  |  | $ | 562,155 |  |  | $ | 392,683 |
On December 22, 2017, the United States enacted the U.S. Tax Cuts and Jobs Act of 2017 (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 had completed our accounting for the transition effects of the 2017 U.S. Tax Act. Approximately $27.0 million of our undistributed foreign earnings are considered to be indefinitely reinvested outside the United States as of December 31, 2019. 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 the years ended December 31, 2019, 2018 and 2017 differ from the federal statutory rate for those periods as follows:
| Years Ended December 31,
| 2019 |  | 2018 |  | 2017
Federal U.S. statutory rate | 21.0 | % |  | 21.0 | % |  | 35.0 | %
Valuation allowance | 4.6 |  |  | 1.4 |  |  | (3.2 | )
Foreign interest income not subject to tax | (4.5 | ) |  | (1.7 | ) |  | (2.2 | )
Tax credits | (3.9 | ) |  | (0.5 | ) |  | (0.3 | )
Foreign-derived intangible income deduction | (2.7 | ) |  | (1.6 | ) |  | — |
Uncertain tax positions | (2.6 | ) |  | (0.9 | ) |  | (0.5 | )
Share-based compensation expense | (2.5 | ) |  | (2.1 | ) |  | (4.2 | )
State income taxes, net of federal income tax benefit | 1.0 |  |  | 2.7 |  |  | 1.9 |
Foreign income taxes | (0.7 | ) |  | (0.5 | ) |  | (12.0 | )
Federal U.S. transition tax | — |  |  | (4.1 | ) |  | 16.2 |
Federal U.S. rate reduction | — |  |  | — |  |  | (55.6 | )
Other SAB 118 adjustments | — |  |  | (0.6 | ) |  | — |
Other | 2.3 |  |  | 0.7 |  |  | (0.9 | )
Effective tax rate | 12.0 | % |  | 13.8 | % |  | (25.8 | )%
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, 2019 and 2018 reflect the effect of temporary differences between the amounts of assets and liabilities for financial accounting and income tax purposes. As of December 31, 2019 and 2018, principal components of deferred tax items were as follows:
| 2019 |  | 2018
| (in thousands)
Deferred income tax assets: |  |  |
Lease liabilities | $ | 94,965 |  |  | $ | — |
Financial instruments | 65,848 |  |  | 768 |
Share-based compensation expense | 48,204 |  |  | 11,333 |
Accrued expenses | 40,035 |  |  | 35,913 |
Foreign net operating loss carryforwards | 37,818 |  |  | 10,833 |
Income tax credit carryforwards | 37,057 |  |  | 3,102 |
Domestic net operating loss carryforwards | 22,254 |  |  | 20,096 |
Basis difference - U.K. business | 2,030 |  |  | 4,890 |
Other | 28,460 |  |  | 13,036 |
| 376,671 |  |  | 99,971 |
Less: valuation allowance | (72,042 | ) |  | (23,390 | )
| 304,629 |  |  | 76,581 |
Deferred tax liabilities: |  |  |
Acquired intangibles | 2,963,695 |  |  | 522,636 |
Property and equipment | 193,052 |  |  | 102,654 |
Partnership interests | 108,220 |  |  | — |
Right-of-use assets | 83,023 |  |  | — |
Other | 95,988 |  |  | 28,188 |
| 3,443,978 |  |  | 653,478 |
Net deferred income tax liability | $ | 3,139,349 |  |  | $ | 576,897 |
The net deferred income taxes reflected on our consolidated balance sheets as of December 31, 2019 and 2018 are as follows:
| 2019 |  | 2018
| (in thousands)
Noncurrent deferred income tax asset | $ | 6,292 |  |  | $ | 8,128 |
Noncurrent deferred income tax liability | 3,145,641 |  |  | 585,025 |
Net deferred income tax liability | $ | 3,139,349 |  |  | $ | 576,897 |
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, 2019, 2018 and 2017 are summarized below (in thousands):
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 | )
Allowance for foreign net operating loss carryforwards | (26,439 | )
Allowance for foreign credit carryforwards | (15,226 | )
Allowance for state credit carryforwards | (6,680 | )
Allowance for domestic net operating loss carryforwards | (307 | )
Balance at December 31, 2019 | $ | (72,042 | )
The increases in the valuation allowance related to both the state and foreign credit carryforwards for the year ended December 31, 2019 relate primarily to carryforward assets recognized in connection with the Merger. Foreign net operating loss carryforwards of $176.9 million, domestic net operating loss carryforwards of $41.6 million and tax credit carryforwards of $36.1 million at December 31, 2019 will expire between December 31, 2024 and December 31, 2039, if not utilized. We conduct business globally and file income tax returns in the U.S. 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, including, without limitation, the United States and the United Kingdom. We are no longer subject to state income tax examinations for years ended on or before May 31, 2010, U.S. federal income tax examinations for years ended on or before May 31, 2016 and U.K. federal income tax examinations for years ended on or before May 31, 2015. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the years ended December 31, 2019, 2018 and 2017 as follows:
| Years Ended December 31,
| 2019 |  | 2018 |  | 2017
| (in thousands)
Balance at the beginning of the year | $ | 21,197 |  |  | $ | 31,218 |  |  | $ | 17,916 |
Additions related to acquisitions | 22,283 |  |  | — |  |  | 13,061 |
Reductions for income tax positions of prior years | (14,235 | ) |  | (10,021 | ) |  | (7,285 | )
Settlements with income tax authorities | (2,583 | ) |  | — |  |  | (449 | )
Additions for income tax positions of prior years | 1,803 |  |  | — |  |  | 411 |
Additions based on income tax positions related to the current year | 1,206 |  |  | — |  |  | 7,537 |
Effect of foreign currency fluctuations on income tax positions | — |  |  | — |  |  | 27 |
Balance at the end of the year | $ | 29,671 |  |  | $ | 21,197 |  |  | $ | 31,218 |
As of December 31, 2019, the total amount of gross unrecognized income tax benefits that, if recognized, would affect the provision for income taxes is $27.4 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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