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Income Taxes | 12 Months Ended
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Dec. 31, 2019
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, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 225,663 |  |  | $ | 195,862 |  |  | $ | 352,433 |
Foreign |  |  | 9,284 |  |  |  | 13,699 |  |  |  | 10,625 |
State |  |  | 40,152 |  |  |  | 37,555 |  |  |  | 37,421 |
|  |  | 275,099 |  |  |  | 247,116 |  |  |  | 400,479 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (27,073 | ) |  |  | (6,216 | ) |  |  | (36,998 | )
Foreign |  |  | 1,874 |  |  |  | (666 | ) |  |  | 24 |
State |  |  | (11,106 | ) |  |  | (3,592 | ) |  |  | 192 |
|  |  | (36,305 | ) |  |  | (10,474 | ) |  |  | (36,782 | )
Total |  | $ | 238,794 |  |  | $ | 236,642 |  |  | $ | 363,697 |
On December 22, 2017, the President of the United States signed into law comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “TCJA-17”). The TCJA-17 made broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations through the implementation of a territorial tax system; (5) creating a new limitation on deductible interest expense; and (6) limiting certain other deductions. We provided a provisional estimate of the effects of the TCJA-17 in the fourth quarter of 2017 financial statements. In the fourth quarter of 2018, we completed our analysis to determine the effects of the TCJA-17 in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”) as follows: Reduction of U.S. federal corporate tax rate: The TCJA-17 reduces the corporate tax rate to 21 percent, effective January 1, 2018. Deferred income taxes are based on the estimated future tax effects of differences between the financial statement carrying amounts and the tax bases of assets and liabilities under the provisions of the enacted tax laws. For certain of our deferred tax assets and deferred tax liabilities, we recorded a provisional decrease of $97 million and $127 million, respectively, with a corresponding net adjustment to deferred tax benefit of $30 million for the year ended December 31, 2017. Upon completion of our 2017 U.S. Corporate Income Tax Return in the fourth quarter, an increase of $1 million attributable to certain deferred tax assets and a decrease of $5 million attributable to certain deferred tax liabilities was recorded resulting in an additional net deferred tax benefit of $6 million. Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain of our foreign subsidiaries. The one-time Transition Tax is based upon the amount of post-1986 E&P of the relevant subsidiaries, the amount of non-U.S. income tax paid on such earnings, as well as other factors. We originally estimated and recorded a provisional Transition Tax obligation of $11.3 million. Upon completion of our 2017 U.S. Corporate Income Tax Return, the final Transition Tax increased by $100,000 for a total of $11.4 million. The TCJA-17 contains two new anti-base erosion tax provisions, (1) the global intangible low-taxed income (“GILTI”) provisions and (2) the base erosion and anti-abuse tax (“BEAT”) provisions: GILTI: The GILTI provisions require the inclusion of the earnings of certain foreign subsidiaries in excess of an acceptable rate of return on certain assets of the respective subsidiaries in our U.S. tax return for tax years beginning after December 31, 2017. An accounting policy election was made during 2018 to treat taxes related to GILTI as a period cost when the tax is incurred. We recorded a GILTI tax provision of zero and less than $1 million for the year ended December 31, 2019 and 2018, respectively. BEAT: The BEAT provisions limit the deduction for U.S. tax base erosion related payments made by U.S. operations to related foreign affiliates. We were not subject to BEAT for the years ended December 31, 2019 and 2018. The foreign provision for income taxes is based on foreign pre-tax earnings of $69 million in 2019, $84 million in 2018 and $70 million in 2017. Prior to the TCJA-17, no deferred taxes were provided related to unremitted earnings from foreign subsidiaries. As a result of the mandatory repatriation tax provisions of the Transition Tax included in the TCJA-17, all undistributed earnings from foreign subsidiaries as of December 31, 2017, were subject to tax. Going forward, we anticipate repatriating only previously taxed foreign earnings subjected to the mandatory repatriation tax as well as any future earnings that would qualify for a full dividend received deduction permitted under the TCJA-17 for distributions post-December 31, 2017. As of December 31, 2019, the amount of previously taxed earnings and earnings that would qualify for a full dividend received deduction total $113 million. At this time, there are no material tax effects related to future cash repatriation of undistributed foreign earnings. As such, we have not recognized a deferred tax liability related to existing undistributed earnings. Our provision for income taxes for the year ended December 31, 2019, 2018 and 2017 included tax benefits of $12 million, $1 million and $22 million, respectively, related to the adoption of ASU 2016-09, which changes how companies account for certain aspects of share-based payments to employees. Under ASU 2016-09, excess tax benefits (when the deductible amount related to the settlement of employee equity awards for tax purposes exceeds the cumulative compensation cost recognized for financial reporting purposes) and deficiencies, if applicable, are recorded as a component of our tax provision. A reconciliation between the federal statutory rate and the effective tax rate is as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 35.0 | %
State taxes, net of federal income tax benefit |  |  | 2.2 | % |  |  | 2.6 | % |  |  | 2.2 | %
Tax effects of foreign operations |  |  | -0.3 | % |  |  | -0.5 | % |  |  | -1.2 | %
Tax benefit from settlement of employee equity awards |  |  | -1.0 | % |  |  | -0.1 | % |  |  | -1.9 | %
Enactment of the TCJA-17 |  |  | 0.0 | % |  |  | -0.6 | % |  |  | -1.7 | %
Other items |  |  | 0.8 | % |  |  | 0.9 | % |  |  | 0.2 | %
Impact of income attributable to noncontrolling interests |  |  | -0.3 | % |  |  | -0.4 | % |  |  | -0.6 | %
Effective tax rate |  |  | 22.4 | % |  |  | 22.9 | % |  |  | 32.0 | %
Our effective tax rates were 22.4%, 22.9% and 32.0% for the years ended December 31, 2019, 2018 and 2017, respectively. The decrease in our effective tax rate for the year ended December 31, 2019 as compared to 2018 is due primarily to tax benefits from employee share-based payments of $12 million and $1 million during the year ended December 2019 and 2018, respectively. The decrease in our effective tax rate for the year ended December 31, 2018 as compared to 2017 is due primarily to the net favorable impact of the enactment of the TCJA-17, as discussed above, partially offset by a $21 million unfavorable change in the tax benefit resulting from our January 1, 2017 adoption of ASU 2016-09. Included in “Other current assets” on our Consolidated Balance Sheet are prepaid federal and state income taxes amounting to approximately $8 million and $24 million as of December 31, 2019 and 2018, respectively. The components of deferred taxes are as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  |  | 2018 |
|  | Assets |  |  |  | Liabilities |  |  |  | Assets |  |  |  | Liabilities |
Self-insurance reserves | $ |  | 69,217 |  |  | $ |  |  |  |  | $ |  | 68,402 |  |  | $ |  |  |
Compensation accruals |  |  | 70,680 |  |  |  |  |  |  |  |  |  | 74,124 |  |  |  |  |  |
Doubtful accounts and other reserves |  |  | 77,665 |  |  |  |  |  |  |  |  |  | 27,184 |  |  |  |  |  |
Other currently non-deductible accrued liabilities |  |  | 36,500 |  |  |  |  |  |  |  |  |  | 35,253 |  |  |  |  |  |
Depreciable and amortizable assets |  |  |  |  |  |  |  | 275,901 |  |  |  |  |  |  |  |  |  | 257,896 |
Operating lease liabilities |  |  | 76,164 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Right of use assets-operating leases |  |  |  |  |  |  |  | 76,164 |  |  |  |  |  |  |  |  |  |  |
State and foreign net operating loss carryforwards and other state and foreign deferred tax assets |  |  | 87,662 |  |  |  |  |  |  |  |  |  | 86,315 |  |  |  |  |  |
Net pension liabilities – OCI only |  |  | 2,427 |  |  |  |  |  |  |  |  |  | 4,475 |  |  |  |  |  |
Other combined items – OCI only |  |  |  |  |  |  |  | 0 |  |  |  |  |  |  |  |  |  | 929 |
Other liabilities |  |  |  |  |  |  |  | 1,855 |  |  |  |  |  |  |  |  |  | 2,045 |
| $ |  | 420,315 |  |  | $ |  | 353,920 |  |  | $ |  | 295,753 |  |  | $ |  | 260,870 |
Valuation Allowance |  |  | (75,277 | ) |  |  |  | 0 |  |  |  |  | (79,264 | ) |  |  |  | 0 |
Total deferred income taxes | $ |  | 345,038 |  |  | $ |  | 353,920 |  |  | $ |  | 216,489 |  |  | $ |  | 260,870 |
At December 31, 2019, state net operating loss carryforwards (losses originating in tax years beginning prior to January 1, 2018, expiring in years 2020 through 2038), and credit carryforwards available to offset future taxable income approximated $1.06 billion representing approximately $75 million in deferred state tax benefit (net of the federal benefit); and state related interest expense carryforwards approximated $116 million representing approximately $5 million in deferred state tax benefit (net of the federal benefit). At December 31, 2019, there were foreign net operating losses and credit carryforwards of approximately $36 million, most of which are carried forward indefinitely, representing approximately $8 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 $71 million and $75 million have been reflected as of December 31, 2019 and 2018, respectively. During 2019, the valuation allowance on these state tax benefits decreased by $4 million related to a change in state tax law. In addition, valuation allowances of approximately $4 million have been reflected as of December 31, 2019 and 2018 related to foreign net operating losses and credit carryforwards. During 2019 and 2018, 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. The balance at each of December 31, 2019 and 2018, if subsequently recognized, that would favorably affect the effective tax rate and the provision for income taxes is approximately $2 million and $1 million respectively. We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of December 31, 2019 and 2018, 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 2016 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, 2019, 2018 and 2017 is as follows (amounts in thousands):
|  | As of December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at January 1, |  | $ | 1,553 |  |  | $ | 1,096 |  |  | $ | 1,259 |
Additions based on tax positions related to the current year |  |  | 500 |  |  |  | 500 |  |  |  | 500 |
Additions for tax positions of prior years |  |  | 113 |  |  |  | 62 |  |  |  | 47 |
Reductions for tax positions of prior years |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Settlements |  |  | (2 | ) |  |  | (105 | ) |  |  | (710 | )
Balance at December 31, |  | $ | 2,164 |  |  | $ | 1,553 |  |  | $ | 1,096 |

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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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