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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of earnings from continuing operations before income taxes and the provision for (benefit from) income taxes from continuing operations were as follows:
|  | Years ended December 31,
|  | 2018 |  | 2017 |  | 2016
|  | (In thousands)
Earnings from continuing operations before income taxes: |  |  |  |  |  |
United States |  | $ | 356,644 |  |  | 254,355 |  |  | 344,614 |
Foreign |  | 17,217 |  |  | 60,190 |  |  | 62,642 |
Total |  | $ | 373,861 |  |  | 314,545 |  |  | 407,256 |
Current tax (benefit) expense from continuing operations: |  |  |  |  |  |
Federal (1) |  | $ | (23,333 | ) |  | 6,752 |  |  | 2,731 |
State |  | 6,862 |  |  | 9,360 |  |  | 7,713 |
Foreign |  | 10,123 |  |  | 6,442 |  |  | 6,411 |
|  | (6,348 | ) |  | 22,554 |  |  | 16,855 |
Deferred tax expense (benefit) from continuing operations: |  |  |  |  |  |
Federal |  | 110,408 |  |  | (510,172 | ) |  | 106,718 |
State |  | 313 |  |  | 8,080 |  |  | 16,299 |
Foreign |  | (6,119 | ) |  | 1,794 |  |  | 2,152 |
|  | 104,602 |  |  | (500,298 | ) |  | 125,169 |
Provision for (benefit from) income taxes from continuing operations |  | $ | 98,254 |  |  | (477,744 | ) |  | 142,024 |
_______________ (1) The 2018 current federal tax benefit includes the anticipated $22 million alternative minimum tax refunds (net of sequestration charge) generated by the 2017 Tax Cuts and Jobs Act. A reconciliation of the federal statutory tax rate with the effective tax rate from continuing operations follows:
|  | Years ended December 31,
|  | 2018 |  | 2017 |  | 2016
|  | (Percentage of pre-tax earnings)
Federal statutory tax rate |  | 21.0 |  |  | 35.0 |  |  | 35.0 |
Impact of one-time deemed repatriation |  | 6.4 |  |  | 10.7 |  |  | — |
Impact on deferred taxes for changes in tax rates |  | (3.5 | ) |  | (196.4 | ) |  | (0.1 | )
Additional deferred tax adjustments |  | (1.6 | ) |  | — |  |  | — |
State income taxes, net of federal income tax benefit |  | 3.8 |  |  | 3.0 |  |  | 4.0 |
Foreign rates varying from federal statutory tax rate |  | 0.1 |  |  | (4.0 | ) |  | (3.3 | )
Tax contingencies |  | (1.1 | ) |  | (0.3 | ) |  | (0.2 | )
Other, net |  | 1.2 |  |  | 0.1 |  |  | (0.5 | )
Effective tax rate |  | 26.3 |  |  | (151.9 | ) |  | 34.9 |
Tax Reform Impact On December 22, 2017, President Trump signed into law U.S. federal tax legislation referred herein as the 2017 Tax Cuts and Jobs Act. The 2017 Tax Cuts and Jobs Act made broad and complex changes to the U.S. tax code for tax years beginning after December 31, 2017, including the reduction in the federal corporate income tax rate from 35% to 21%, the repeal of the alternative minimum tax (AMT), limitations on the deductibility of certain expenses and the creation of new taxes on certain foreign global intangible low-taxed income (GILTI). The 2017 Tax Cuts and Jobs Act also required companies to pay a one-time transition tax (Transition Tax) in the last tax year beginning before January 1, 2018, on unremitted earnings of certain foreign subsidiaries that had not previously been subject to U.S. income tax. The changes from the 2017 Tax Cuts and Jobs Act have had a significant impact on our earnings. Due to the complexities of implementing the provisions of the 2017 Tax Cuts and Jobs Act, the staff of the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin 118 (SAB 118) which provides guidance on accounting for tax effects of the 2017 Tax Cuts and Jobs Act and permits a measurement period not to exceed one year from the enactment date for companies to complete the required analyses and accounting. As permitted under SAB 118, we recorded a $619 million benefit for the re-measurement of our net deferred tax liability and a $33 million expense for the Transition Tax as reasonable provisional estimates in our 2017 financial statements. During the subsequent one year measurement period, we completed our analyses and recorded an additional $10 million benefit on the deferred tax remeasurement and an additional $24 million charge for the Transition Tax. Additionally, we have completed our assessment of GILTI and have established a policy to account for this potential income inclusion using the period cost method. In addition to repealing the AMT, the 2017 Tax Cuts and Jobs Act allows taxpayers to claim refunds for their AMT credit carryforwards. In the first quarter of 2018, in accordance with the Balanced Budget and Emergency Deficit Control Act of 1985, the Internal Revenue Service (IRS) announced that the refundable AMT credits would be subject to sequestration. Accordingly, we recorded a $1 million charge to account for the 6.2% sequestration rate on our $23 million of refundable AMT credits. On January 14, 2019, the IRS reversed its position and announced that refundable AMT credits would not be subject to sequestration. We will therefore reverse the $1 million sequestration charge in our first quarter 2019 earnings. Deferred Income Taxes The components of the net deferred income tax liability were as follows:
|  | December 31,
|  | 2018 |  | 2017
|  | (In thousands)
Deferred income tax assets: |  |  |  |
Self-insurance accruals |  | $ | 82,042 |  |  | 75,198 |
Net operating loss carryforwards |  | 414,143 |  |  | 171,053 |
Alternative minimum taxes (1) |  | — |  |  | 22,552 |
Accrued compensation and benefits |  | 56,066 |  |  | 63,536 |
Federal benefit on state tax positions |  | 11,027 |  |  | 11,950 |
Pension benefits |  | 91,890 |  |  | 82,547 |
Miscellaneous other accruals |  | 20,760 |  |  | 19,608 |
|  | 675,928 |  |  | 446,444 |
Valuation allowance |  | (16,186 | ) |  | (18,667 | )
|  | 659,742 |  |  | 427,777 |
Deferred income tax liabilities: |  |  |  |
Property and equipment basis difference |  | (1,936,372 | ) |  | (1,614,963 | )
Other |  | (13,940 | ) |  | (16,857 | )
|  | (1,950,312 | ) |  | (1,631,820 | )
Net deferred income tax liability (2) |  | $ | (1,290,570 | ) |  | (1,204,043 | )
______________
(1) | The current and noncurrent portions of the AMT credit refunds were reclassified to "Prepaid expenses and other current assets" and "Direct financing leases and other assets" in 2018.
(2) | Deferred tax assets of $14 million and $7 million have been included in "Direct financing leases and other assets" at December 31, 2018 and 2017.
As of December 31, 2018, we have undistributed earnings of foreign subsidiaries of $784 million, the majority of which were reinvested into non-cash property, plant and equipment. We have historically reinvested such earnings overseas indefinitely and continue to reinvest future foreign earnings overseas indefinitely. With respect to the $784 million of undistributed earnings at December 31, 2018, $635 million was included in the Transition Tax. 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, 2018, we had U.S. federal tax effected net operating loss carryforwards, before unrecognized tax benefits, of $323 million, of which $140 million is expected to expire beginning 2033; the remaining $183 million has an indefinite carryforward period. Various U.S. subsidiaries had state tax effected net operating loss carryforwards, before unrecognized tax benefits and valuation allowances, of $123 million that will begin to expire as follows: approximately $6 million in 2019, approximately $7 million in 2020, and approximately $110 million in 2021 and thereafter. To the extent that the Company does not generate sufficient state taxable income within the statutory carryforward periods to utilize the loss carryforwards in these states, the loss carryforwards will expire unused. Of the total tax effected federal and state net operating losses, $13 million and $3 million, respectively, were acquired as part of the MXD acquisition on April 2, 2018. These acquired net operating losses are subject to the provisions of Internal Revenue Code Section 382 which addresses the limitations on tax attributes arising from changes in stock ownership. We also had foreign tax effected net operating losses of $13 million that are available to reduce future income tax payments in several countries, subject to varying expiration rules. Due to the uncertainty of achieving sufficient sources of taxable income in various state and foreign jurisdictions and the near-term expiration of certain net operating loss carryforwards, the Company has recorded valuation allowances of $16 million against its deferred tax assets. During 2018, we determined that certain deferred tax assets had been undervalued in prior periods. As the amounts were not material to our consolidated financial statements in any individual period, and the cumulative amount is not material to 2018 results, we recognized a one-time $6 million benefit in our provision for income taxes related to the correction of this error. 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 2008. State — for the majority of states, tax returns are closed through fiscal year 2011 with the exception of states with net operating loss carryforwards that are generally closed through 1997. Foreign — we are no longer subject to foreign tax examinations by tax authorities for tax years through 2009 in Canada, 2012 in Mexico and 2016 in the U.K., which are our major foreign tax jurisdictions, and 2012 in Brazil for discontinued operations. The following table summarizes the activity related to unrecognized tax benefits (excluding the federal benefit received from state positions):
|  | December 31,
|  | 2018 |  | 2017 |  | 2016
|  | (In thousands)
Balance at January 1 |  | $ | 62,288 |  |  | 61,649 |  |  | 60,740 |
Additions based on tax positions related to the current year |  | 3,885 |  |  | 3,971 |  |  | 3,855 |
Reductions due to lapse of applicable statutes of limitation |  | (7,354 | ) |  | (3,332 | ) |  | (2,946 | )
Gross balance at December 31 |  | 58,819 |  |  | 62,288 |  |  | 61,649 |
Interest and penalties |  | 4,594 |  |  | 5,860 |  |  | 5,219 |
Balance at December 31 |  | $ | 63,413 |  |  | 68,148 |  |  | 66,868 |
Of the total unrecognized tax benefits, $52 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 $4 million and $5 million of interest and penalties, respectively, at December 31, 2018 and 2017, net of the federal benefit on state interest. Unrecognized tax benefits related to federal, state and foreign tax positions may decrease by $10 million by December 31, 2019, if audits are completed or tax years close during 2019. During 2018, we determined that reserves for certain uncertain tax positions should have been reversed in prior periods when the statutes of limitations expired. As the amounts were not material to our consolidated financial statements in any individual period, and the cumulative amount is not material to 2018 results, we recognized a one-time $4 million benefit in our provision for income taxes related to the correction of this error.

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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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