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9. Income Taxes | 3 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | . INCOME TAXES Our effective income tax rate was 24% and 38% for the three months ended March 31, 2018 and 2017, respectively. The effective tax rate for the first quarter of 2018 was lower compared to the first quarter of 2017 primarily due to the reduction in the U.S. federal statutory rate from 35% to 21% that was enacted at the end of 2017. The tax benefit from the lower U.S. federal statutory tax rate was offset with the increase in the state tax expense due to the higher U.S. pre-tax income in the first quarter of 2018 and the introduction of a number of new tax provisions in the U.S. as a part of the comprehensive tax legislation (the "Tax Act") that was enacted into law on December 22, 2017, such as the Global Intangible Low-Taxed Income (“GILTI”) inclusion. In accordance with SAB 118, our accounting for the following elements of the Tax Act was incomplete at December 31, 2017. However, we were able to make reasonable estimates of certain effects and, therefore, recorded provisional estimates as follows:
• | Our deferred tax assets and liabilities were measured at the enacted tax rate that will apply when these temporary differences are expected to be realized or settled.
• | The Tax Act imposes a Transition Tax payable over eight years. The Transition Tax is assessed on the U.S. shareholders’ share of certain foreign corporations’ accumulated untaxed foreign earnings. Earnings in the form of cash and cash equivalents are taxed at a rate of 15.5% and all other earnings are taxed at a rate of 8.0%. We recorded a provisional income tax expense of $55 million for Transition Tax.
Our accounting for certain other elements of the Tax Act was incomplete, and we were not able to make reasonable estimates of those effects. For example, we did not make a determination as to our accounting policy with respect to the new Global Intangible Low-Taxed Income ("GILTI"). For the period ended March 31, 2018, we did not record adjustments to our provisional amounts. We will continue our analysis of these provisional amounts during the measurement period and may adjust these estimates as further regulatory guidance becomes available. On January 1, 2018, we adopted ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" (see Note 1 above). The adoption resulted in the recognition of an additional deferred tax liability of $232.9 million, due primarily to our investment in Sartorius AG ordinary shares. In addition, the change in the fair market value of our investment in Sartorius AG during the first quarter of 2018 resulted in a deferred tax expense of $181.1 million. We assess our ability to realize our net deferred tax assets on a quarterly basis and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized in the foreseeable future. Due to the weight of negative evidence, including our history of losses in certain jurisdictions, we believe that it is more-likely-than-not that certain foreign deferred tax assets will not be realized as of March 31, 2018. Accordingly, we have maintained a valuation allowance on such deferred tax assets. Our income tax returns are routinely audited by U.S. federal, state and foreign tax authorities. We are currently under examination by many of these tax authorities. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We evaluate our exposures associated with our tax filing positions on a quarterly basis. We record liabilities for unrecognized tax benefits related to uncertain tax positions. We do not believe any currently pending uncertain tax positions will have a material adverse effect on our condensed consolidated financial statements, although an adverse resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period. As of March 31, 2018, based on the expected outcome of certain examinations or as a result of the expiration of statute of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $3 million. Substantially all such amounts will favorably impact our effective income tax rate.

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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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