XML 35 R18.htm IDEA: XBRL DOCUMENT v3.20.4
INCOME TAX
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
INCOME TAX INCOME TAX
The income tax expense for the years ended December 31, 2020, 2019 and 2018 consisted of the following:
Years Ended December 31,
202020192018
(in thousands)
Current income tax expense (benefit): 
Federal$124,176 $50,048 $(20,984)
State35,840 29,788 21,122 
Foreign82,456 90,895 79,320 
 242,472 170,731 79,458 
Deferred income tax expense (benefit):
Federal(151,824)(79,813)(8,760)
State(20,607)(29,326)(1,684)
Foreign7,112 598 8,474 
 (165,319)(108,541)(1,970)
$77,153 $62,190 $77,488 
 
Income tax expense allocated to noncontrolling interests was $8.5 million, $12.3 million and $10.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The following table presents income before income taxes for the years ended December 31, 2020, 2019 and 2018:
Years Ended December 31,
202020192018
(in thousands)
United States$194,190 $60,000 $131,067 
Foreign399,766 457,925 431,088 
$593,956 $517,925 $562,155 

Approximately $32.3 million of our undistributed foreign earnings are considered to be indefinitely reinvested outside the United States as of December 31, 2020. 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, 2020, 2019 and 2018 differ from the federal statutory rate for those periods as follows:
Years Ended December 31,
202020192018
Federal U.S. statutory rate21.0 %21.0 %21.0 %
Tax credits(5.3)(3.9)(0.5)
Foreign interest income not subject to tax(4.2)(4.5)(1.7)
Foreign-derived intangible income deduction(2.8)(2.7)(1.6)
Share-based compensation expense(2.7)(2.5)(2.1)
Nondeductible executive compensation1.7 1.0 0.3 
Equity method investment partnership income1.1 — — 
Uncertain tax positions1.1 (2.6)(0.9)
State income taxes, net of federal income tax benefit0.7 1.0 2.7 
Foreign income taxes0.6 (0.7)(0.5)
Valuation allowance(0.1)4.6 1.4 
Federal U.S. transition tax— — (4.1)
Other1.9 1.3 (0.2)
Effective tax rate13.0 %12.0 %13.8 %
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, 2020 and 2019 reflect the effect of temporary differences between the amounts of assets and liabilities for financial accounting and income tax purposes. As of December 31, 2020 and 2019, principal components of deferred tax items were as follows:
20202019
(in thousands)
Deferred income tax assets:
Lease liabilities$105,959 $94,965 
Foreign net operating loss carryforwards107,931 37,818 
Financial instruments60,340 65,848 
Credit carryforwards42,637 37,057 
Share-based compensation expense41,558 48,204 
Accrued expenses38,521 40,035 
Domestic net operating loss carryforwards18,952 22,254 
Other58,107 30,490 
474,005 376,671 
Valuation allowance(132,531)(72,042)
341,474 304,629 
Deferred tax liabilities:
Acquired intangibles2,736,300 2,963,695 
Property and equipment248,375 193,052 
Partnership interests100,951 108,220 
Right-of-use assets89,734 83,023 
Other106,877 95,988 
3,282,237 3,443,978 
Net deferred income tax liability$2,940,763 $3,139,349 

The net deferred income taxes reflected on our consolidated balance sheets as of December 31, 2020 and 2019 are as follows:
20202019
(in thousands)
Noncurrent deferred income tax asset$(7,627)$(6,292)
Noncurrent deferred income tax liability2,948,390 3,145,641 
Net deferred income tax liability$2,940,763 $3,139,349 
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, 2020, 2019 and 2018 are summarized below (in thousands):

Balance at December 31, 2017$(16,550)
Allowance for foreign net operating loss carryforwards(7,979)
Allowance for domestic net operating loss carryforwards1,145 
Allowance for state credit carryforwards(6)
Balance at December 31, 2018(23,390)
Allowance for foreign net operating loss carryforwards(26,439)
Allowance for foreign credit carryforwards(15,226)
Allowance for state credit carryforwards(6,680)
Allowance for domestic net operating loss carryforwards(307)
Balance at December 31, 2019(72,042)
Allowance for foreign net operating loss carryforwards(63,113)
Allowance for foreign credit carryforwards(2,486)
Allowance for state credit carryforwards2,932 
Allowance for domestic net operating loss carryforwards2,178 
Balance at December 31, 2020$(132,531)

The increase in the valuation allowance related to the foreign net operating loss carryforwards for the year ended December 31, 2020 is due to the addition of a foreign affiliate net operating loss with a related full valuation allowance. 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 $99.3 million will expire between December 31, 2024 and December 31, 2040, if not utilized. Foreign net operating loss carryforwards of $2.3 million have indefinite carryforward periods. Domestic net operating loss carryforwards of $24.3 million and tax credit carryforwards of $43.6 million will expire between December 31, 2024 and December 31, 2040, 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. We are no longer subject to state income tax examinations for years ended on or before May 31, 2007, U.S. federal income tax examinations for years ended on or before December 31, 2016 and U.K. corporation tax examinations for years ended on or before December 31, 2016.
A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the years ended December 31, 2020, 2019 and 2018 as follows:
Years Ended December 31,
202020192018
(in thousands)
Balance at the beginning of the year$29,671 $21,197 $31,218 
Additions related to acquisitions3,186 22,283 — 
Reductions for income tax positions of prior years(5,408)(14,235)(10,021)
Settlements with income tax authorities(909)(2,583)— 
Additions for income tax positions of prior years7,968 1,803 — 
Additions based on income tax positions related to the current year4,900 1,206 — 
Balance at the end of the year$39,408 $29,671 $21,197 

As of December 31, 2020, the total amount of gross unrecognized income tax benefits that, if recognized, would affect the provision for income taxes is $35.1 million.