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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES |
NOTE 7. | INCOME TAXES
On December 22, 2017, the United States enacted the 2017 Tax Act. The 2017 Tax Act, which is also commonly referred to as “U.S. tax reform”, significantly changed U.S. corporate income tax laws by, among other things, reducing the U.S. corporate income tax rate from 35% to 21% starting in 2018 and created a territorial tax system with a one-time mandatory tax on the undistributed foreign earnings of the Company's non-U.S. subsidiaries. As a result, the Company recorded a net income tax benefit of $13.9 million during the fourth quarter of 2017. This amount, which reduced income tax expense, consisted of three components:
| i. | $116.2 million of deferred income tax benefit resulting from the remeasurement of net deferred tax liabilities based on the new lower U.S. income tax rate,
| ii. | $70.2 million provisional estimate of deferred income tax expense for the reversal of net deferred tax asset provided for foreign income tax credits in excess of unremitted foreign earnings (after adjustment of the unremitted foreign earnings liability to reflect the lower U.S. tax rate) to transition to the territorial tax system, and
| iii. | $32.1 million of current income tax expense relating to the provisional estimate of the one-time mandatory tax (Transition Tax) on undistributed earnings of the Company's non-U.S. subsidiaries.
In addition, as a result of the transition to a territorial tax system in the U.S., the effective tax rate for the year ended December 31, 2017 included a $25.4 million income tax benefit, as foreign tax rates were lower than the 2017 U.S. corporate income tax rate of 35%. Given the significance of the legislation, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allowed registrants to record provisional amounts of income tax during a one-year “measurement period.” Provisional amounts included any changes as a result of further guidance and interpretations issued in the future and also included any indirect impacts required to be recorded, including for example amounts recorded for state income taxes. December 2018 marked the end of the provisional measurement period for purposes of SAB 118. As such, the Company has completed the analysis based on current legislative updates relating to the 2017 Tax Act, which resulted in an increase of $1 million to the Transition Tax obligation initially recorded in 2017. The Company also decreased its provisional foreign tax credits on repatriated earnings initially recorded at December 31, 2017, by $3.6 million during 2018 based on additional guidance and clarifications issued. Income tax expense (benefit) includes the following components:
|  |  | Federal |  |  | State |  |  | Foreign |  |  | Total |
| 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Current |  | $ | 35,324 |  |  | $ | 13,711 |  |  | $ | 150,261 |  |  | $ | 199,296 |
| Deferred |  |  | 3,149 |  |  |  | 1,333 |  |  |  | — |  |  |  | 4,482 |
|  |  | $ | 38,473 |  |  | $ | 15,044 |  |  | $ | 150,261 |  |  | $ | 203,778 |
| 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Current |  | $ | 45,996 |  |  | $ | 13,262 |  |  | $ | 151,312 |  |  | $ | 210,570 |
| Deferred |  |  | (9,759 | ) |  |  | (2,272 | ) |  |  | — |  |  |  | (12,031 | )
|  |  | $ | 36,237 |  |  | $ | 10,990 |  |  | $ | 151,312 |  |  | $ | 198,539 |
| 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Current |  | $ | 101,821 |  |  | $ | 20,490 |  |  | $ | 149,596 |  |  | $ | 271,907 |
| Deferred |  |  | (42,474 | ) |  |  | (1,221 | ) |  |  | — |  |  |  | (43,695 | )
|  |  | $ | 59,347 |  |  | $ | 19,269 |  |  | $ | 149,596 |  |  | $ | 228,212 |
The components of earnings before income taxes are as follows:
|  |  | 2019 |  |  | 2018 |  |  | 2017 |
| United States |  | $ | 327,878 |  |  | $ | 313,178 |  |  | $ | 276,714 |
| Foreign |  |  | 467,916 |  |  |  | 505,151 |  |  |  | 441,881 |
|  |  | $ | 795,794 |  |  | $ | 818,329 |  |  | $ | 718,595 |
Income tax expense differs from amounts computed by applying the United States Federal income tax rate of 21% in both 2019 and 2018 and 35% in 2017 when compared to earnings before income taxes as a result of the following:
|  |  | 2019 |  |  | 2018 |  |  | 2017 |
| Computed “expected” tax expense |  | $ | 167,117 |  |  | $ | 171,849 |  |  | $ | 251,508 |
| Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
| Effect of foreign taxes |  |  | 26,599 |  |  |  | 16,445 |  |  |  | (25,374 | )
| State income taxes, net of Federal income tax benefit |  |  | 11,885 |  |  |  | 8,682 |  |  |  | 12,525 |
| Nondeductible executive compensation |  |  | 2,838 |  |  |  | 3,126 |  |  |  | — |
| Stock compensation expense, net |  |  | (2,689 | ) |  |  | (3,860 | ) |  |  | 63 |
| Enactment of 2017 Tax Act |  |  | — |  |  |  | — |  |  |  | (13,894 | )
| Other, net |  |  | (1,972 | ) |  |  | 2,297 |  |  |  | 3,384 |
|  |  | $ | 203,778 |  |  | $ | 198,539 |  |  | $ | 228,212 |
In addition to the lower U.S. federal tax rate that resulted from the 2017 Tax Act, the Company's effective tax rate in both 2019 and 2018 benefited from significant share-based compensation deductions. In 2019 and 2018, the Company also benefited from U.S. Federal tax credits totaling $15.7 million and $20.3 million, respectively, principally because of withholding taxes related to the Company's foreign operations, as well as U.S. income tax deductions for Foreign-derived intangible income (FDII) of $9.0 million and $4.8 million, respectively. Also, in both 2019 and 2018, the Company received state income tax refunds totaling approximately $4 million. These amounts were partially offset by the effect of higher foreign tax rates of the Company's international subsidiaries, when compared to the U.S. Federal income tax rate of 21%, as well as certain expenses that are no longer deductible under the 2017 Tax Act, including certain executive compensation in excess of amounts allowed. The tax effects of temporary differences and tax credits that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows:
| Years ended December 31, |  | 2019 |  |  | 2018 |
| Deferred Tax Assets: |  |  |  |  |  |  |  |
| Deductible stock compensation expense, net |  | $ | 18,569 |  |  | $ | 19,011 |
| Operating lease liabilities |  |  | 52,966 |  |  |  | — |
| Accrued third party obligations, deductible for taxes upon economic performance |  |  | 5,333 |  |  |  | 7,726 |
| Excess of financial statement over tax depreciation |  |  | 5,802 |  |  |  | 5,134 |
| Foreign currency translation adjustments |  |  | 9,248 |  |  |  | 37,299 |
| Retained liability for cargo claims |  |  | 1,006 |  |  |  | 1,025 |
| Provision for doubtful accounts receivable |  |  | 916 |  |  |  | 1,443 |
| Total gross deferred tax assets |  |  | 93,840 |  |  |  | 71,638 |
| Deferred Tax Liabilities: |  |  |  |  |  |  |  |
| Unremitted foreign earnings, net of related foreign tax credits |  |  | 31,615 |  |  |  | 31,173 |
| Operating lease assets |  |  | 52,351 |  |  |  | — |
| Deferred contract costs |  |  | 1,840 |  |  |  | — |
| Total gross deferred tax liabilities |  |  | 85,806 |  |  |  | 31,173 |
| Net deferred tax assets |  | $ | 8,034 |  |  | $ | 40,465 |
Based on management’s review of the Company’s tax positions, the Company had no significant unrecognized tax benefits as of December 31, 2019 and 2018. The Company is subject to taxation in various states and many foreign jurisdictions including the People’s Republic of China, including Hong Kong, Taiwan, Vietnam, India, Mexico, Canada, Netherlands and the United Kingdom. The Company believes that its tax positions, including intercompany transfer pricing policies, are reasonable and consistently applied. The Company is under, or may be subject to, audit or examination and assessments by the relevant authorities in respect to these and any other jurisdictions primarily for years 2009 and thereafter. Sometimes audits result in proposed assessments where the ultimate resolution could result in significant additional tax, penalties and interest payments being required. The Company establishes liabilities when, despite its belief that the tax return positions are appropriate and consistent with tax law, it concludes that it may not be successful in realizing the tax position. In evaluating a tax position, the Company determines whether it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position and in consultation with qualified tax advisors. The total amount of the Company’s tax contingencies may increase in 2020. In addition, changes in state, federal, and foreign tax laws and changes in interpretations of these laws may increase the Company’s existing tax contingencies. The timing of the resolution of income tax examinations can be highly uncertain, and the amounts ultimately paid including interest and penalties, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts recorded. It is reasonably possible that within the next twelve months the Company may undergo further audits and examinations by various tax authorities and possibly may reach resolution related to income tax examinations in one or more jurisdictions. These assessments or settlements could result in changes to the Company’s contingencies related to positions on tax filings in future years. The estimate of any ultimate tax liability contains assumptions based on experiences, judgments about potential actions by taxing jurisdictions as well as judgments about the likely outcome of issues that have been raised by the taxing jurisdiction. Any interest and penalties expensed in relation to the underpayment of income taxes were insignificant for the years ended December 31, 2019, 2018 and 2017.

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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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