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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of earnings from continuing operations before income taxes and the (benefit from) provision for income taxes from continuing operations were as follows:
|  | Years ended December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (In thousands)
Earnings from continuing operations before income taxes: |  |  |  |  |  |
United States |  | $ | 254,327 |  |  | 344,614 |  |  | 408,757 |
Foreign |  | 59,459 |  |  | 61,767 |  |  | 60,458 |
Total |  | $ | 313,786 |  |  | 406,381 |  |  | 469,215 |
Current tax expense (benefit) from continuing operations: |  |  |  |  |  |
Federal (1) |  | $ | 6,752 |  |  | 2,731 |  |  | (1,836 | )
State (1) |  | 9,360 |  |  | 7,713 |  |  | 5,748 |
Foreign |  | 6,442 |  |  | 6,411 |  |  | 5,272 |
|  | 22,554 |  |  | 16,855 |  |  | 9,184 |
Deferred tax (benefit) expense from continuing operations: |  |  |  |  |  |
Federal |  | (509,573 | ) |  | 106,513 |  |  | 135,585 |
State |  | 7,985 |  |  | 16,259 |  |  | 20,111 |
Foreign |  | 1,805 |  |  | 2,114 |  |  | (1,654 | )
|  | (499,783 | ) |  | 124,886 |  |  | 154,042 |
(Benefit from) provision for income taxes from continuing operations |  | $ | (477,229 | ) |  | 141,741 |  |  | 163,226 |
______________
(1) | Excludes federal and state tax benefits resulting from the exercise of stock options and vesting of restricted stock awards, which were credited directly to “Additional paid-in capital” for the year ended December 31, 2015.
A reconciliation of the federal statutory tax rate with the effective tax rate from continuing operations follows:
|  | Years ended December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (Percentage of pre-tax earnings)
Federal statutory tax rate |  | 35.0 |  |  | 35.0 |  |  | 35.0 |
Impact of one-time deemed repatriation |  | 10.7 |  |  | — |  |  | — |
Impact on deferred taxes for changes in tax rates |  | (197.5 | ) |  | (0.7 | ) |  | (0.9 | )
State income taxes, net of federal income tax benefit |  | 4.5 |  |  | 5.0 |  |  | 5.0 |
Foreign rates varying from federal statutory tax rate |  | (4.0 | ) |  | (3.3 | ) |  | (3.3 | )
Tax reviews and audits |  | (1.0 | ) |  | (0.7 | ) |  | (1.3 | )
Other, net |  | 0.2 |  |  | (0.4 | ) |  | 0.3 |
Effective tax rate |  | (152.1 | ) |  | 34.9 |  |  | 34.8 |
Tax Law Changes On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act makes broad and complex changes to the U.S. tax code and it will take time to fully interpret the changes. The Act significantly impacted our fourth quarter and full year 2017 earnings, and will impact earnings in future periods; however, we were not able to fully complete the accounting under ASC 740 for certain of the Act’s new provisions. In accordance with SEC Staff Accounting Bulletin No.118, to the extent the accounting for certain income tax effects of the Act was incomplete, but we were able to determine a reasonable estimate of those effects, a provisional amount (“provisional amount”) has been included in our financial statements. Conversely, where a reasonable estimate of the tax effects of the Act cannot be determined, no related provisional amounts have been included in the financial statements. We intend to adjust the tax effects for the relevant items during the allowed 2018 measurement period. Among other changes, the Act reduces the federal corporate tax rate from 35% to 21%. The tax rate change will decrease our effective tax rate going forward. Under generally accepted accounting principles, deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. As a result of the federal tax rate reduction, we remeasured our net deferred tax liability at December 31, 2017. The remeasurement, which is a provisional estimate, resulted in a reduction in the value of our net deferred tax liability of $619 million, which was recorded as an income tax benefit in our consolidated statement of income for the three months ended December 31, 2017. The Act also requires companies to pay a one-time transition tax on unremitted earnings of certain foreign subsidiaries that had not been subject to U.S. income tax and creates new taxes on certain foreign earnings. We have included a provisional estimate of $33 million for the transition tax in the December 31, 2017 financial statements. The estimate will be adjusted during the measurement period as we refine our determination of historical earnings and profits and the amount of cash and cash equivalents held in foreign entities. The following provides a summary of the increases to net earnings from continuing operations from changes in tax laws by tax jurisdiction:
Tax Jurisdiction |  | Enactment Date |  | Net Earnings
|  |  |  | (in thousands)
2017 |  |  |  |
United States |  | December 22, 2017 |  | $585,912
Illinois |  | July 1, 2017 |  | $(1,844)
2016 |  |  |  |
North Carolina |  | August 4, 2016 |  | $585
2015 |  |  |  |
Connecticut |  | June 30, 2015 |  | $1,616
Other Jurisdictions |  | April 13, 2015 - November 18, 2015 |  | $497
Deferred Income Taxes The components of the net deferred income tax liability were as follows:
|  | December 31,
|  | 2017 |  | 2016
|  | (In thousands)
Deferred income tax assets: |  |  |  |
Self-insurance accruals |  | $ | 75,198 |  |  | 107,252 |
Net operating loss carryforwards |  | 171,053 |  |  | 396,313 |
Alternative minimum taxes |  | 22,552 |  |  | 13,901 |
Accrued compensation and benefits |  | 65,532 |  |  | 81,454 |
Federal benefit on state tax positions |  | 11,950 |  |  | 19,247 |
Pension benefits |  | 82,547 |  |  | 162,141 |
Miscellaneous other accruals |  | 19,608 |  |  | 28,313 |
|  | 448,440 |  |  | 808,621 |
Valuation allowance |  | (18,667 | ) |  | (16,387 | )
|  | 429,773 |  |  | 792,234 |
Deferred income tax liabilities: |  |  |  |
Property and equipment basis difference |  | (1,614,963 | ) |  | (2,451,151 | )
Other |  | (16,857 | ) |  | (20,735 | )
|  | (1,631,820 | ) |  | (2,471,886 | )
Net deferred income tax liability (1) |  | $ | (1,202,047 | ) |  | (1,679,652 | )
______________
(1) | Deferred tax assets of $7 million and $9 million have been included in "Direct financing leases and other assets" at December 31, 2017 and 2016.
As of December 31, 2017, we have undistributed earnings of foreign subsidiaries of $774 million, the majority of which were reinvested into non-cash property, plant and equipment. The provisional estimate of the transition tax incurred in connection with the Act will result in U.S. federal income taxes on approximately $345 million of earnings and profit for U.S. federal income tax purposes. We have historically reinvested such earnings overseas indefinitely and may continue to reinvest future foreign earnings overseas indefinitely. As such, deferred income taxes have not been provided on undistributed earnings of foreign subsidiaries. However, because the Act implements a territorial tax system, whereby certain foreign subsidiary earnings can be repatriated to the U.S. with no federal tax, we are reassessing whether to indefinitely reinvest our overseas earnings. The determination of the amount of any additional unrecognized deferred tax liability is not practicable because of the complexities associated with the hypothetical calculations used in evaluating whether we will maintain the indefinite reinvestment assertion. At December 31, 2017, we had U.S. federal tax effected net operating loss carryforwards of $128 million and various U.S. subsidiaries had state tax effected net operating loss carryforwards of $29 million both expiring through tax year 2037. We also had foreign tax effected net operating losses of $14 million that are available to reduce future income tax payments in several countries, subject to varying expiration rules. A valuation allowance has been established to reduce deferred income tax assets, principally foreign tax loss carryforwards, to amounts more likely than not to be realized. We had unused alternative minimum tax credits of $23 million at December 31, 2017, which may be refundable under the Act. Uncertain Tax Positions The following is a summary of tax years that are no longer subject to examination: Federal — audits of our U.S. federal income tax returns are closed through fiscal year 2009. State — for the majority of states, tax returns are closed through fiscal year 2009. Foreign — we are no longer subject to foreign tax examinations by tax authorities for tax years before 2010 in Canada, 2011 in Brazil, 2011 in Mexico and 2012 in the U.K., which are our major foreign tax jurisdictions. The following table summarizes the activity related to unrecognized tax benefits (excluding the federal benefit received from state positions):
|  | December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (In thousands)
Balance at January 1 |  | $ | 61,649 |  |  | 60,740 |  |  | 60,482 |
Additions based on tax positions related to the current year |  | 3,971 |  |  | 3,855 |  |  | 4,220 |
Reductions due to lapse of applicable statutes of limitation |  | (3,332 | ) |  | (2,946 | ) |  | (3,962 | )
Gross balance at December 31 |  | 62,288 |  |  | 61,649 |  |  | 60,740 |
Interest and penalties |  | 5,860 |  |  | 5,219 |  |  | 4,912 |
Balance at December 31 |  | $ | 68,148 |  |  | 66,868 |  |  | 65,652 |
Of the total unrecognized tax benefits, $56 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. The total includes $5 million of interest and penalties at both, December 31, 2017 and 2016, net of the federal benefit on state issues. Unrecognized tax benefits related to federal, state and foreign tax positions may decrease by $3 million by December 31, 2018, if audits are completed or tax years close during 2018. Like-Kind Exchange Program We have a like-kind exchange program for certain of our U.S.-based revenue earning equipment. Pursuant to the program, we dispose of vehicles and acquire replacement vehicles in a form whereby tax gains on disposal of eligible vehicles are deferred. To qualify for like-kind exchange treatment, we exchange through a qualified intermediary eligible vehicles being disposed of with vehicles being acquired, allowing us to generally carryover the tax basis of the vehicles sold (“like-kind exchanges”). The program results in a material deferral of federal and state income taxes, and a decrease in cash taxes in periods when we are not in a net operating loss (NOL) position. As part of the program, the proceeds from the sale of eligible vehicles are restricted for the acquisition of replacement vehicles and other specified applications. Due to the structure utilized to facilitate the like-kind exchanges, the qualified intermediary that holds the proceeds from the sales of eligible vehicles and the entity that holds the vehicles to be acquired under the program are required to be consolidated in the accompanying Consolidated Financial Statements in accordance with U.S. GAAP. The total assets, primarily revenue earning equipment, and the total liabilities, primarily vehicle accounts payable, held by these consolidated entities are equal in value as these entities are solely structured to facilitate the like-kind exchanges. At December 31, 2017 and 2016, these consolidated entities had total assets, primarily revenue earning equipment, and total liabilities, primarily accounts payable, of $232 million and $140 million, respectively. The Act repeals like-kind exchange treatment for revenue earning equipment after December 31, 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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