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Income Taxes | 9 Months Ended
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Sep. 29, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12 – Income Taxes Our effective tax rate was 23.3% for the nine months ended September 29, 2018 and 26.3% for the nine months ended September 30, 2017. The difference between our effective tax rate and the federal statutory tax rate for the nine months ended September 29, 2018 primarily relates to the Tax Cuts and Jobs Act (“the Tax Act”), as well as state and foreign income taxes and interest expense. The difference between our effective t ax rate and the federal statutory tax rate for the nine months ended September 30, 2017 primarily relates to the adoption of ASU No. 2016-09, “Stock Compensation” (Topic 718) (“ASU 2016-09”) in the first quarter of 2017, as well as state and foreign income taxes and interest expense. Under ASU 2016-09, all excess tax benefits and tax deficiencies resulting from the difference between the deduction for tax purposes and the stock-based compensation cost recognized for financial reporting purposes are includ ed as a component of income tax expense beginning January 1, 2017. Prior to the implementation of ASU 2016-09, excess tax benefits were recorded as a component of Additional paid in capital and tax deficiencies were recognized either as an offset to accum ulated excess tax benefits or in the income statement if there were no accumulated excess tax benefits. For the nine months ended September 29, 2018 and September 30, 2017, the application of ASU No. 2016-09 reduced income tax expense by approximately $1.0 million and $19.5 million, respectively. On December 22, 2017, the U.S. government passed the Tax Act. The Tax Act is comprehensive tax legislation effective January 1, 2018 that implements complex changes to the U.S. tax code including, but not limite d to, the reduction of the corporate tax rate from 35% to 21%, modification of accelerated depreciation, the repeal of the domestic manufacturing deduction and changes to the limitations of the deductibility of interest. The Tax Act also includes provisio ns to tax global intangible low-taxed income (“GILTI”), a beneficial tax rate for Foreign Derived Intangible Income (“FDII”), a base erosion and anti-abuse tax (“BEAT”) that imposes tax on certain foreign related-party payments, and IRC Section 163(j) inte rest limitation (Interest Limitation). We are subject to the GILTI, FDII, BEAT and Interest Limitation provisions effective January 1, 2018. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity c an make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. We have elected to recognize th e tax on GILTI as a period expense in the period the tax is incurred. Under Topic 740, we have reasonably estimated the impact of each provision of the Tax Act on our effective tax rate. We have recorded an estimate for the GILTI provision in our effecti ve tax rate for the nine months ended September 29, 2018. For the BEAT, FDII and Interest Limitation computations, we have not recorded an estimate in our effective tax rate for the nine months ended September 29, 2018 because we currently estimate that t hese provisions of the Tax Act will not apply to us or will have an immaterial impact in 2018. Due to the complexity of the new GILTI tax rules and uncertainty of the application of the foreign tax credit rules in relation to GILTI, we have calculated GIL TI based upon the law as we currently interpret it, and subsequent changes in law could cause us to revise our calculations in a later period. Due to the complexities of the Tax Act, the Staff of the SEC issued Staff Accounting Bulletin No. 118 (“SAB 1 18”) that requires us to record a provisional amount for any income tax effects of the Tax Act in accordance with Topic 740, to the extent that a reasonable estimate can be made. SAB 118 allows for a measurement period of up to one year after the enactmen t date of the Tax Act to finalize the recording of the related tax impacts. In the fourth quarter of 2017, we recorded provisional amounts for income tax effects of the Tax Act that we could reasonably estimate. This included the one-time transition tax that we estimated to be $140.0 million and a net deferred tax expense of $3.0 million attributable to the revaluation of deferred tax assets and liabilities due to the lower enacted federal income tax rate of 21%. For the nine months ended September 29, 2 018, we recorded a provisional benefit of $10 million related to transition tax adjustments and a net deferred tax benefit of $1.5 million attributable to the revaluation of deferred tax assets and liabilities. We will continue to refine provisional amount s for the impacts of the Tax Act as anticipated guidance, clarifying certain aspects of the Tax Act, becomes available. We will record any adjustments in the fourth quarter of 2018 when our analysis is complete, although we do not expect any material adju stments. The total amount of unrecognized tax benefits as of September 29, 2018 was approximately $104.6 million, of which $83.0 million would affect the effective tax rate if recognized. It is expected that the amount of unrecognized tax benefits will change in the next 12 months; however, we do not expect the change to have a material impact on our consolidated financial statements. The total amounts of interest and penalties, which are classified as a component of Other liabilities within our consol idated balance sheets, were approximately $15.3 million and $0.0, respectively, as of September 29, 2018. In 2016, we reached a settlement on a portion of the IRS audit of tax years 2012 and 2013, and we filed a Mutual Agreement Procedure request with the IRS for assistance from the U.S. Competent Authority for an open Transfer Pricing issue which resulted in a partial settlement during the quarter ended December 30, 2017. During the quarter ended June 30, 2017, we filed a protest with the Appellate Division regarding the remaining open audit issues for the years 2012 and 2013. We had an initial Appeals Conference during the third quarter of 2018. In addition, we are working on finalizing our submission for an A dvanced Pricing Agreement pursuant to which Henry Schein, Inc. and the IRS w ould agree on an appropriate transfer pricing methodology for future tax years. We do not expect this to have a material effect on our consolidated financial position, liquidity or results of operations.

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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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