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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES In preparing our Consolidated Financial Statements, we utilize the asset and liability approach in accounting for income taxes. We recognize income taxes in each of the jurisdictions in which we have a presence. For each jurisdiction, we estimate the actual amount of income taxes currently payable or receivable, as well as deferred income tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The provision for income taxes for 2020, 2019 and 2018, consisted of the following:
| Years Ended December 31,
(in millions) | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Federal | $ | (22.0) |  |  | $ | (75.5) |  |  | $ | 24.5 |
State | 1.3 |  |  | (5.2) |  |  | 1.8 |
Non-U.S. | 114.4 |  |  | 119.1 |  |  | 147.2 |
Total current | 93.7 |  |  | 38.4 |  |  | 173.5 |
Noncurrent: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | — |  |  | — |  |  | — |
Non-U.S. | 3.2 |  |  | — |  |  | — |
Total noncurrent | 3.2 |  |  | — |  |  | — |
Deferred: |  |  |  |  |
Federal | $ | (66.7) |  |  | $ | (194.8) |  |  | $ | (105.1) |
State | (12.9) |  |  | (6.7) |  |  | 9.9 |
Non-U.S. | (595.8) |  |  | (61.6) |  |  | (1.2) |
Total deferred | (675.4) |  |  | (263.1) |  |  | (96.4) |
(Benefit from) provision for income taxes | $ | (578.5) |  |  | $ | (224.7) |  |  | $ | 77.1 |
The components of earnings from consolidated companies before income taxes, and the effects of significant adjustments to tax computed at the federal statutory rate, were as follows:
| Years Ended December 31,
(in millions) | 2020 |  | 2019 |  | 2018
United States earnings (loss) | $ | (449.0) |  |  | $ | (1,096.2) |  |  | $ | 322.7 |
Non-U.S. earnings | 629.9 |  |  | (159.9) |  |  | 228.8 |
(Loss) earnings from consolidated companies before income taxes | $ | 180.9 |  |  | $ | (1,256.1) |  |  | $ | 551.5 |
Computed tax at the U.S. federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State and local income taxes, net of federal income tax benefit | (7.0) | % |  | 2.6 | % |  | 2.0 | %
Percentage depletion in excess of basis | (10.3) | % |  | 2.5 | % |  | (6.7) | %
Impact of non-U.S. earnings | 42.1 | % |  | 5.3 | % |  | 11.8 | %
Change in valuation allowance | (330.0) | % |  | (3.1) | % |  | (15.2) | %
Phosphates goodwill impairment | — | % |  | (5.0) | % |  | — | %
Non-U.S. incentives | (35.6) | % |  | — | % |  | — | %
Share-based excess cost/(benefits) | — | % |  | — | % |  | 0.7 | %
Other items (none in excess of 5% of computed tax) | — | % |  | (5.4) | % |  | 0.4 | %
Effective tax rate | (319.8) | % |  | 17.9 | % |  | 14.0 | %
2020 Effective Tax Rate In the year ended December 31, 2020, there were two items impacting the effective tax rate: 1) items attributable to ordinary business operations during the year, and 2) other items specific to the period, including impacts recorded due to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act provides various tax relief measures to taxpayers impacted by the coronavirus. The tax impact of our ordinary business operations is affected by the mix of earnings across jurisdictions in which we operate, by a benefit associated with depletion, by a benefit associated with non-U.S. incentives, changes in valuation allowances and by the impact of certain entities being taxed in both their foreign jurisdiction and the U.S., including foreign tax credits for various taxes incurred. Tax expense specific to the period included a net benefit of ($609.0) million. The net benefit relates to the following: ($582.6) million for changes to valuation allowances in the U.S. and foreign jurisdictions, ($23.6) million related to certain provisions of the CARES Act, $(5.5) million related to release of the sequestration on AMT and miscellaneous tax expense of $2.7 million. The change to the valuation allowance in Brazil related to the Acquired Business. As of December 31, 2020, the Acquired Business has achieved cumulative income and therefore we were able to rely on future forecasts of taxable income which support realization of its deferred tax assets. 2019 Effective Tax Rate In the year ended December 31, 2019, there were two items impacting the effective tax rate; 1) items attributable to ordinary business operations during the year, and 2) other items specific to the period, including impacts recorded due to the U.S. Tax Cuts and Jobs Act (the “Act”). The tax impact of our ordinary business operations is impacted by the mix of earnings across jurisdictions in which we operate, by a benefit associated with depletion, changes in valuation allowances and by the impact of certain entities being taxed in both their foreign jurisdiction and the U.S., including foreign tax credits for various taxes incurred. Tax expense specific to the period included a benefit of ($355.6) million. The benefit relates to various notable items, which resulted in the following tax benefits: ($263.4) million related to the indefinite idling of the Colonsay mine, ($81.0) million related to the Plant City closure costs, and ($79.6) million related to the phosphates goodwill impairment. These tax benefits are partially offset by tax expense of: $21.2 million for changes in certain provisions of the Act, $15.9 million for valuation allowances in the U.S. and foreign jurisdictions, $14.0 million related to state tax rate changes, $12.5 million related to changes in estimates related to prior years (including changes in certain provisions of the Act), and miscellaneous tax expense of $4.8 million. The tax expense of $21.2 million related to certain provisions of the Act and is the reversal of the benefit recorded in December 31, 2018 that pertained to the one-time “deemed” repatriation. 2018 Effective Tax Rate In the year ended December 31, 2018, there were three types of items impacting the effective tax rate; 1) items attributable to ordinary business operations during the year, 2) other items specific to the period, and 3) impacts recorded due to the Act. The tax impact of our ordinary business operations is impacted by the mix of earnings across jurisdictions in which we operate, by a benefit associated with depletion, changes in valuation allowances and by the impact of certain entities being taxed in both their foreign jurisdiction and the U.S., including foreign tax credits for various taxes incurred. Tax expense specific to the period included a cost of $0.7 million. This relates to various items including: a benefit of ($30.6) million related to revised valuation allowances on foreign tax credits, a $12.2 million cost as a result of revisions to the provisional estimates related to the Act, a $15.0 million cost for withholding taxes related to undistributed earnings, a cost of $11.7 million for valuation allowances in foreign jurisdictions, a benefit of ($8.6) million related to release of the sequestration on future AMT refunds, and other miscellaneous costs of $1.0 million. Impacts of the Tax Cuts and Jobs Act On December 22, 2017, The Act was enacted, significantly altering U.S. corporate income tax law. The SEC issued Staff Accounting Bulletin 118, which allows companies to record reasonable estimates of enactment impacts where the underlying analysis and calculations are not yet complete (“Provisional Estimates”). The Provisional Estimates were required to be finalized within a one-year measurement period. In the period ending December 31, 2017, we recorded Provisional Estimates of the impact of the Act of $457.5 million related to several key changes in the law. As of December 31, 2019, the impacts of the Act were finalized. All future impacts of future issued guidance will be appropriately accounted for in the period in which the law is enacted. The Act imposed a one-time tax on “deemed” repatriation of foreign subsidiaries’ earnings and profits. The repatriation resulted in an estimated non-cash charge of $107.7 million. The charge was offset by a $202.6 million, non-cash reduction in the deferred tax liability related to certain undistributed earnings. Both of these items were recorded in the period ending December 31, 2017. The December 31, 2017 provisional estimates have been revised and finalized in the period ending December 31, 2018, resulting in an additional benefit of $9.0 million of which a cost of $12.2 million is included in the tax expense specific to the period and a benefit of $21.2 million is included in the annual effective tax rate. However, the benefit of $21.2 million resulted from certain provisions of the Act that pertain to the repatriation that, based on proposed guidance from the U.S. Internal Revenue Service, we anticipated could reverse when the regulations were finalized. As discussed above, the regulations were finalized in 2019 and the benefit was reversed. As of December 31, 2017, we recognized a $2.3 million non-cash, deferred tax benefit related to the reduction of the U.S. federal rate from 35 percent to 21 percent. The Act significantly modified the U.S. taxation of foreign earnings and the treatment of the related foreign tax credits. In December 2017, as a result of these changes, we recorded valuation allowances against our foreign tax credits and our anticipatory foreign tax credits of $105.8 million and $440.3 million, respectively. As of December 2018, we concluded that the foreign tax credits would more likely than not be utilized and the related valuation allowance of $105.8 million was reversed as a benefit. This benefit arose due to both revisions in the estimated impact of the Act and estimates with respect to future forecasted income. Of the $105.8 million benefit, $30.6 million was recorded as tax benefit specific to the period. As of December 31, 2018, we recorded a valuation allowance against U.S. branch basket foreign tax credits of $156.8 million and anticipatory foreign tax credits of $361.6 million. The Act repeals the corporate alternative minimum tax, or AMT, system and allows for the cash refund of excess AMT credits. As of December 31, 2017, the refundable AMT amounts were subject to a set of federal budgeting rules where a certain portion of the refundable amount would permanently be disallowed (the “Sequestration Rules”). We estimated that we would receive a cash refund of $121.5 million net of an $8.6 million charge related to the Sequestration Rules. In 2018, guidance was released that concluded that the Sequestration Rules do not apply to AMT credits related to the Act. As of December 31, 2018, we estimated that we will receive a cash refund of $100.4 million and the sequestration charge of $8.6 million recorded at December 31, 2017 was reversed. The estimated refundable alternative minimum tax credit was included in other non-current assets at both December 31, 2018 and December 31, 2017. As of December 31, 2020 all AMT refunds have been received. The Act introduced a new category of taxable income called global intangible low-taxed income (“GILTI”). No provisional estimates were recorded as of December 31, 2017 for the impacts of GILTI since we had not completed our full analysis of that provision of the Act. We have included GILTI in our December 31, 2018 provision for income taxes, which did not have a material impact to the Company for the current year. We have elected an accounting policy to record any GILTI liabilities as period costs. Deferred Tax Liabilities and Assets Significant components of our deferred tax liabilities and assets as of December 31 were as follows:
| December 31,
(in millions) | 2020 |  | 2019
Deferred tax liabilities: |  |  |
Depreciation and amortization | $ | 232.5 |  |  | $ | 70.7 |
Depletion | 527.0 |  |  | 530.7 |
Partnership tax basis differences | 69.0 |  |  | 69.8 |
Undistributed earnings of non-U.S. subsidiaries | 3.8 |  |  | 3.8 |
Other liabilities | 32.5 |  |  | 19.0 |
Total deferred tax liabilities | $ | 864.8 |  |  | $ | 694.0 |
Deferred tax assets: |  |  |
Deferred revenue | $ | 62.4 |  |  | $ | — |
Capital loss carryforwards | 0.1 |  |  | — |
Foreign tax credit carryforwards | 628.6 |  |  | 522.5 |
Net operating loss carryforwards | 321.8 |  |  | 420.0 |
Pension plans and other benefits | 34.2 |  |  | 43.8 |
Asset retirement obligations | 262.9 |  |  | 232.1 |
Disallowed interest expense under §163(j) | 68.8 |  |  | 58.1 |
Other assets | 287.6 |  |  | 349.3 |
Subtotal | 1,666.4 |  |  | 1,625.8 |
Valuation allowance | 683.0 |  |  | 1,457.1 |
Net deferred tax assets | 983.4 |  |  | 168.7 |
Net deferred tax liabilities | $ | 118.6 |  |  | $ | (525.3) |
We have certain non-U.S. entities that are taxed in both their local jurisdiction and the U.S. As a result, we have deferred tax balances for both jurisdictions. As of December 31, 2020 and 2019, these non-U.S. deferred taxes are offset by approximately $191.0 million and $224.6 million, respectively, of anticipated foreign tax credits included within our depreciation and depletion components of deferred tax liabilities above. Due to the Act, we have recorded a valuation allowance against the anticipated foreign tax credits of $235.5 million and $224.6 million for December 31, 2020 and 2019, respectively. Tax Carryforwards As of December 31, 2020, we had estimated carryforwards for tax purposes as follows: net operating losses of $1.6 billion, foreign tax credits of $628.6 million and $1.4 million of non-U.S. business credits. These carryforward benefits may be subject to limitations imposed by the Internal Revenue Code, and in certain cases, provisions of foreign law. Approximately $634 million of our net operating loss carryforwards relate to Brazil and can be carried forward indefinitely but are limited to 30 percent of taxable income each year. The majority of the remaining net operating loss carryforwards relate to U.S. federal and certain U.S. states and can be carried forward for 20 years. Of the $628.6 million of foreign tax credits, approximately $70.3 million have an expiration date of 2023, approximately $238.6 million have an expiration date of 2026, approximately $18.3 million have an expiration date of 2028, and approximately $30.5 million have an expiration date of 2029, and approximately $12.3 million have an expiration date of 2030. The realization of our foreign tax credit carryforwards is dependent on market conditions, tax law changes, and other business outcomes including our ability to generate certain types of taxable income in the future. Due to current business operations and future forecasts, the Company has determined that no valuation allowance is required on its general basket foreign tax credits. As a result of changes in U.S. tax law due to the Act, the Company valuation allowances recorded against its branch basket foreign tax credits of $249.6 million as of December 31, 2020. As of December 31, 2020, we have not recognized a deferred tax liability for un-remitted earnings of approximately $1.2 billion from certain foreign operations because we believe our subsidiaries have invested the undistributed earnings indefinitely, or the earnings will be remitted in a tax-neutral transaction. It is not practicable for us to determine the amount of unrecognized deferred tax liability on these reinvested earnings. As part of the accounting for the Act, we recorded local country withholding taxes related to certain entities from which we began repatriating undistributed earnings and will continue to record local country withholding taxes, including foreign exchange impacts, on all future earnings. Valuation Allowance In assessing the need for a valuation allowance, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing the relative impact of all the available positive and negative evidence regarding our forecasted taxable income using both historical and projected future operating results, the reversal of existing taxable temporary differences, taxable income in prior carry-back years (if permitted) and the availability of tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of certain types of future taxable income during the periods in which those temporary differences become deductible. In making this assessment, we consider the scheduled reversal of deferred tax liabilities, our ability to carry back the deferred tax asset, projected future taxable income, and tax planning strategies. A valuation allowance will be recorded in each jurisdiction in which a deferred income tax asset is recorded when it is more likely than not that the deferred income tax asset will not be realized. Changes in deferred tax asset valuation allowances typically impact income tax expense. For the year ended December 31, 2020, the valuation allowance decreased by $774.1 million, of which a $763.5 million decrease related to changes in valuation allowances and currency translation in Brazil, $3.5 million related to net operating losses for certain U.S. states and $32.2 million related to our conclusion that we are more likely than not to use attributes at other foreign jurisdictions. These decreases to the valuation allowance were partially offset by the following increases: $24.1 million increase related to U.S. branch foreign tax credits and $0.9 million related to net operating losses in Peru. For the year ended December 31, 2019, the valuation allowance decreased by $73.4 million, of which a $48.0 million decrease related to changes in valuation allowances and currency translation in Brazil, and a $49.8 million decrease related to U.S. branch foreign tax credits. These decreases to the valuation allowance were offset by the following increases: $6.8 million related to net operating losses for certain U.S. states, $8.3 million related to net operating losses in Peru, and $9.2 million related to our conclusion that we are not more likely than not to use attributes at other foreign jurisdictions. For the year ended year ended December 31, 2018, the valuation allowance increased by $945.8 million, of which $956.2 million related to valuation allowances on the Vale acquisition and $30.7 million related to changes in the U.S. tax law imposed by the Act. The remaining amount relates to our conclusion that we are not more likely than not to use attributes at other foreign jurisdictions. Uncertain Tax Positions Accounting for uncertain income tax positions is determined by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. This minimum threshold is that a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than a fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2020, we had $36.9 million of gross uncertain tax positions. If recognized, the benefit to our effective tax rate in future periods would be approximately $19.9 million of that amount. During 2020, we recorded net decreases in our uncertain tax positions of $2.6 million related to certain U.S. and non-U.S. tax matters, of which $2.8 million impacted the effective tax rate. This increase was offset by items not included in gross uncertain tax positions. Based upon the information available as of December 31, 2020, it is reasonably possible that the amount of unrecognized tax benefits will change in the next twelve months; however, the change cannot reasonably be estimated. A summary of gross unrecognized tax benefit activity is as follows:
| Years Ended December 31,
(in millions) | 2020 |  | 2019 |  | 2018
Gross unrecognized tax benefits, beginning of period | $ | 39.5 |  |  | $ | 38.1 |  |  | $ | 39.3 |
Gross increases: |  |  |  |  |
Prior period tax positions | — |  |  | — |  |  | 0.3 |
Current period tax positions | 2.8 |  |  | 5.1 |  |  | 3.8 |
Gross decreases: |  |  |  |  |
Prior period tax positions | (5.9) |  |  | (4.9) |  |  | (2.9) |
Currency translation | 0.5 |  |  | 1.2 |  |  | (2.4) |
Gross unrecognized tax benefits, end of period | $ | 36.9 |  |  | $ | 39.5 |  |  | $ | 38.1 |
We recognize interest and penalties related to unrecognized tax benefits as a component of our income tax expense. Interest and penalties accrued in our Consolidated Balance Sheets as of December 31, 2020 and 2019 were $9.0 million and $7.4 million, respectively, and are included in other noncurrent liabilities in the Consolidated Balance Sheets. Open Tax Periods We operate in multiple tax jurisdictions, both within the United States and outside the United States, and face audits from various tax authorities regarding transfer pricing, deductibility of certain expenses, and intercompany transactions, as well as other matters. With few exceptions, we are no longer subject to examination for tax years prior to 2012. Mosaic is continually under audit by various tax authorities in the normal course of business. Such tax authorities may raise issues contrary to positions taken by the Company. If such positions are ultimately not sustained by the Company this could result in material assessments to the Company. The costs related to defending, if needed, such positions on appeal or in court may be material. The Company believes that any issues considered are properly accounted for. We are currently under audit by the Canada Revenue Agency for the tax years ended May 31, 2012 through December 31, 2017. Based on the information available, we do not anticipate significant changes to our unrecognized tax benefits as a result of these examinations other than the amounts discussed above.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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