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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 6) INCOME TAXES Components of income tax expense/(benefit) are as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 363,734 |  |  | $ | 248,172 |  |  | $ | 256,545 |
Foreign |  |  | 3,151 |  |  |  | 4,167 |  |  |  | 1,655 |
State |  |  | 38,987 |  |  |  | 23,224 |  |  |  | 28,490 |
|  |  | 405,872 |  |  |  | 275,563 |  |  |  | 286,690 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (15,912 | ) |  |  | 41,583 |  |  |  | 25,341 |
Foreign |  |  | 5,545 |  |  |  | — |  |  |  | — |
State |  |  | (302 | ) |  |  | 7,525 |  |  |  | 3,278 |
|  |  | (10,669 | ) |  |  | 49,108 |  |  |  | 28,619 |
Total |  | $ | 395,203 |  |  | $ | 324,671 |  |  | $ | 315,309 |
Deferred taxes are required to be classified based on the financial statement classification of the related assets and liabilities which give rise to temporary differences. Deferred taxes result from temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The components of deferred taxes are as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2015 |  |  | 2014 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Self-insurance reserves |  | $ | 88,401 |  |  | $ | 84,915 |
Compensation accruals |  |  | 66,399 |  |  |  | 55,788 |
State and foreign net operating loss carryforwards and other state and foreign deferred tax assets |  |  | 62,541 |  |  |  | 60,521 |
Other currently non-deductible accrued liabilities |  |  | 17,213 |  |  |  | 16,739 |
Net pension liability—OCI only |  |  | 10,929 |  |  |  | 11,746 |
Doubtful accounts and other reserves |  |  | 29,616 |  |  |  | 18,428 |
Other combined items—OCI only |  |  | 457 |  |  |  | 2,615 |
|  |  | 275,556 |  |  |  | 250,752 |
Less: Valuation Allowance |  |  | (52,567 | ) |  |  | (52,764 | )
Net deferred income tax assets: |  |  | 222,989 |  |  |  | 197,988 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Depreciable and amortizable assets |  |  | (400,809 | ) |  |  | (362,674 | )
Other deferred tax liabilities |  |  | (2,960 | ) |  |  | (2,963 | )
Net deferred income tax liabilities |  | $ | (180,780 | ) |  | $ | (167,649 | )
Increases in deferred tax assets relating to foreign net operating loss carryforwards reflect the impact of deferred taxes recorded in conjunction with the acquisition of 5 additional behavioral health care facilities located in the U.K. during 2015. Increases in deferred tax liabilities relating to depreciable and separately identifiable intangible assets primarily reflect the impact of deferred taxes recorded in conjunction with the acquisition of Foundations Recovery Network, LLC (“Foundations”). The effective tax rates, as calculated by dividing the provision for income taxes by income before income taxes, were as follows for each of the years ended December 31, 2015, 2014 and 2013 (dollar amounts in thousands):
|  | 2015 |  |  | 2014 |  |  | 2013 |
Provision for income taxes |  | $ | 395,203 |  |  | $ | 324,671 |  |  | $ | 315,309 |
Income before income taxes |  |  | 1,145,901 |  |  |  | 929,667 |  |  |  | 869,332 |
Effective tax rate |  |  | 34.5 | % |  |  | 34.9 | % |  |  | 36.3 | %
Impacting the effective tax rates during 2015, 2014 and 2013 were favorable discrete tax items of approximately $1 million recorded during each year to adjust the estimated liabilities for uncertain tax positions. The foreign provision for income taxes is based on foreign pre-tax earnings of $41 million in 2015, $15 million in 2014 and $6 million in 2013. Our consolidated financial statements provide for any related tax liability on undistributed earnings that we do not intend to be indefinitely reinvested outside the U.S. Certain of our undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. have a statutory rate of 20.25%. As of December 31, 2015, U.S. income taxes have not been provided on a cumulative total of $53 million of such earnings. The amount of unrecognizable deferred tax liability related to these temporary differences is estimated to be approximately $8 million. A reconciliation between the federal statutory rate and the effective tax rate is as follows:
|  | Year Ended December 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
Federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State taxes, net of federal income tax benefit |  |  | 2.3 | % |  |  | 2.3 | % |  |  | 2.5 | %
Divestiture gain |  |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.3 | %
Other items |  |  | -0.6 | % |  |  | 0.0 | % |  |  | 0.4 | %
Impact of income attributable to noncontrolling interests |  |  | -2.2 | % |  |  | -2.4 | % |  |  | -1.9 | %
Effective tax rate |  |  | 34.5 | % |  |  | 34.9 | % |  |  | 36.3 | %
Included in “Other current assets” on our Consolidated Balance Sheet are prepaid federal, foreign, and state income taxes amounting to approximately $42 million and $17 million as of December 31, 2015 and 2014, respectively. The net deferred tax assets and liabilities are comprised as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2015 |  |  | 2014 |
Current deferred taxes |  |  |  |  |  |  |  |
Assets |  | $ | 135,120 |  |  | $ | 115,870 |
Liabilities |  |  | — |  |  |  | (1,305 | )
Total deferred taxes-current |  |  | 135,120 |  |  |  | 114,565 |
Noncurrent deferred taxes |  |  |  |  |  |  |  |
Assets |  |  | 92,383 |  |  |  | 85,792 |
Liabilities |  |  | (408,283 | ) |  |  | (368,006 | )
Total deferred taxes-noncurrent |  |  | (315,900 | ) |  |  | (282,214 | )
Total deferred tax liabilities |  | $ | (180,780 | ) |  | $ | (167,649 | )
The assets and liabilities classified as current relate primarily to the allowance for uncollectible patient accounts, compensation-related accruals and the current portion of the temporary differences related to self- insurance reserves. At December 31, 2015, state net operating loss carryforwards (expiring in years 2016 through 2035), and credit carryforwards available to offset future taxable income approximated $1.08 billion representing approximately $53 million in deferred state tax benefit (net of the federal benefit). At December 31, 2015, there were foreign net operating loss carryforwards of approximately $20 million expiring through 2023 representing approximately $5 million in deferred foreign tax benefit. A valuation allowance is required when it is more likely than not that some portion of the deferred tax assets will not be realized. Based on available evidence, it is more likely than not that certain of our state tax benefits will not be realized. Therefore, valuation allowances of approximately $51 million and $50 million have been reflected as of December 31, 2015 and 2014, respectively. During 2015, the valuation allowance on these state tax benefits increased by $1 million due to additional net operating losses incurred. In addition, valuation allowances of approximately $2 million and $3 million have been reflected as of December 31, 2015 and 2014 related to foreign net operating losses. There were no significant increases in valuation allowances as a result of the acquisition of Foundations. We adopted the provisions of Accounting for Uncertainty in Income Taxes effective January 1, 2007. During 2015 and 2014, the estimated liabilities for uncertain tax positions (including accrued interest and penalties) were increased less than $1 million due to tax positions taken in the current and prior years. During 2015, the estimated liabilities for uncertain tax positions (including accrued interest and penalties) were reduced due to the lapse of the statute of limitations resulting in a net income tax benefit of approximately $1 million. The balance at each of December 31, 2015 and 2014, if subsequently recognized, that would favorably affect the effective tax rate and the provision for income taxes is approximately $1 million and $2 million, respectively. We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of December 31, 2015 and 2014, we have accrued interest and penalties of less than $1 million as of each date. The U.S. federal statute of limitations remains open for the 2012 and subsequent years. Foreign and U.S. state and local jurisdictions have statutes of limitations generally ranging for 3 to 4 years. The statute of limitations on certain jurisdictions could expire within the next twelve months. It is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months, however, it is anticipated that any such change, if it were to occur, would not have a material impact on our results of operations. The tabular reconciliation of unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 is as follows (amounts in thousands).
|  | As of December 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
Balance at January 1, |  | $ | 2,402 |  |  | $ | 3,369 |  |  | $ | 6,824 |
Additions based on tax positions related to the current year |  |  | 50 |  |  |  | 50 |  |  |  | 50 |
Additions for tax positions of prior years |  |  | 111 |  |  |  | 195 |  |  |  | 283 |
Reductions for tax positions of prior years |  |  | (524 | ) |  |  | (1,212 | ) |  |  | (1,260 | )
Settlements |  |  | (57 | ) |  |  | — |  |  |  | (2,528 | )
Balance at December 31, |  | $ | 1,982 |  |  | $ | 2,402 |  |  | $ | 3,369 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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