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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income taxes are determined using the liability method of accounting for income taxes, under which deferred tax assets ("DTAs") and deferred tax liabilities ("DTLs") are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. If, based upon all available evidence, both positive and negative, it is more likely than not that such DTAs will not be realized, a valuation allowance is recorded. Management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing DTAs in each taxpaying jurisdiction. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2018. Such strong objective evidence puts less emphasis on other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2018, a valuation allowance of $245.2 million has been recorded to recognize only the portion of the DTAs that are more likely than not to be realized; however, the amount of the DTAs considered realizable could be adjusted if estimates of future taxable income during the carryforward period change or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for future growth. We apply a recognition threshold and measurement attribute related to uncertain tax positions taken or expected to be taken on our tax returns. We recognize a tax benefit for financial reporting of an uncertain income tax position when it has a greater than 50% likelihood of being sustained upon examination by the taxing authorities. We measure the tax benefit of an uncertain tax position based on the largest benefit that has a greater than 50% likelihood of being ultimately realized including evaluation of settlements. The components of net loss from continuing operations before income taxes are as follows:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
United States |  | $ | (356.0 | ) |  | $ | (336.6 | ) |  | $ | (563.7 | )
Foreign |  | 16.7 |  |  | 108.8 |  |  | 85.0 |
Net loss before income tax (benefit) expense |  | $ | (339.3 | ) |  | $ | (227.8 | ) |  | $ | (478.7 | )
The components of income tax expense (benefit) are as follows:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Current |  |  |  |  |  |
U.S. Federal |  | $ | 19.0 |  |  | $ | 5.0 |  |  | $ | 10.2 |
U.S. State |  | 3.7 |  |  | (4.0 | ) |  | (0.3 | )
Foreign |  | 22.6 |  |  | 24.8 |  |  | 32.0 |
Total |  | 45.3 |  |  | 25.8 |  |  | 41.9 |
Deferred |  |  |  |  |  |
U.S. Federal |  | (9.8 | ) |  | (5.8 | ) |  | (129.5 | )
U.S. State |  | (7.1 | ) |  | 2.5 |  |  | (8.5 | )
Foreign |  | (15.3 | ) |  | (8.0 | ) |  | (28.9 | )
Total |  | (32.2 | ) |  | (11.3 | ) |  | (166.9 | )
Total income tax expense (benefit) |  | $ | 13.1 |  |  | $ | 14.5 |  |  | $ | (125.0 | )
The reconciliation of the U.S. federal statutory tax rate to the actual tax rate is presented below:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Statutory U.S. federal income tax rate |  | 21.0 | % |  | 35.0 | % |  | 35.0 | %
Foreign earnings at rates different than U.S. federal rate |  | (1.5 | )% |  | (5.7 | )% |  | (1.5 | )%
Valuation allowance adjustments |  | (16.8 | )% |  | (40.8 | )% |  | (6.5 | )%
Impact of U.S. Tax Reform |  | (3.1 | )% |  | 4.3 | % |  | — | %
Other |  | (3.5 | )% |  | 0.8 | % |  | (0.9 | )%
Effective income tax rate |  | (3.9 | )% |  | (6.4 | )% |  | 26.1 | %
Our 2018 effective tax rate was impacted by the change in valuation allowances totaling $92.9 million against domestic (federal and state) net DTAs. Our 2017 effective tax rate was impacted by the recording of valuation allowances totaling $49.7 million against domestic (federal and state) net DTAs. Deferred income taxes reflect the net tax effects of temporary differences between the carrying values of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred income tax balances are established using the enacted statutory tax rates and are adjusted for changes in such rates in the period of change.
|  | December 31,
|  | 2018 |  | 2017
Deferred tax assets: |  |  |  |
Reserves and other accrued expenses |  | $ | 37.1 |  |  | $ | 29.4 |
Net operating loss carry forwards |  | 436.2 |  |  | 395.5 |
Tax credit carry forwards |  | 29.1 |  |  | 26.7 |
Interest limitation carryforwards |  | 105.8 |  |  | — |
Differences in financial reporting and tax basis for: |  |  |  |
Other |  | 63.6 |  |  | 70.7 |
Valuation allowance |  | (245.2 | ) |  | (158.8 | )
Realizable deferred tax assets |  | 426.6 |  |  | 363.5 |
Deferred tax liabilities: |  |  |  |  |  |
Reserves and other accrued expenses |  | (4.5 | ) |  | (16.0 | )
Deferred costs and prepaid expenses |  | (45.2 | ) |  | (8.2 | )
Differences in financial reporting and tax basis for: |  |  |  |
Identifiable intangible assets |  | (382.6 | ) |  | (352.0 | )
Property and equipment |  | (62.3 | ) |  | (25.5 | )
Other |  | (9.6 | ) |  | (2.0 | )
Total deferred tax liabilities |  | (504.2 | ) |  | (403.7 | )
Net deferred tax liability on balance sheet |  | $ | (77.6 | ) |  | $ | (40.2 | )
At December 31, 2018, we had the following NOL, interest limitation, R&D credit, and state tax credit carry forwards:
| December 31, 2018
| Federal |  | State |  | Foreign
NOL carry forwards | $ | 1,540.3 |  |  | $ | 1,437.2 |  |  | $ | 164.7 |
Interest limitation carry forwards | 413.9 |  |  | 252.6 |  |  | 7.4 |
R&D and state credit carry forwards | 29.1 |  |  | 2.4 |  |  | — |
The federal and state tax loss carryforwards will expire through 2038. The foreign NOL carryforwards can be carried forward for periods that vary from five years to indefinitely. R&D tax credit carryforwards will expire through 2038, and state tax credits expire through 2023. The interest limitation carryforwards can be carried forward indefinitely in all jurisdictions in which we have them available. At December 31, 2018 and 2017, we had the following valuation allowances:
|  | December 31,
|  | 2018 |  | 2017
Federal |  | $ | 161.6 |  |  | $ | 69.4 |
State |  | 49.5 |  |  | 48.9 |
Foreign |  | 34.0 |  |  | 40.5 |
Undistributed earnings of subsidiaries are accounted for as a temporary difference, except that DTLs are not recorded for undistributed earnings of foreign subsidiaries that are deemed to be indefinitely reinvested in foreign jurisdictions. The Tax Act required us to compute a tax on previously undistributed earnings and profits of our foreign subsidiaries upon transition from a worldwide tax system to a territorial tax system during the year ended December 31, 2017. The repatriation of such amounts in the future should generally be exempt from income taxes in the U.S. (as a result of the Tax Act) and in those jurisdictions that have a similar territorial system of taxation. Substantially all of our current year foreign cash flows are not intended to be indefinitely reinvested offshore, and therefore the tax effects of repatriation (including applicable withholding taxes) of such cash flows are provided for in our financial reporting. Unrecognized Tax Benefits The total amount of unrecognized tax benefits as of December 31, 2018 was $33.8 million. Of this amount, $33.8 million, if recognized, would be included in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on our effective tax rate. We have determined it is reasonably possible that the unrecognized tax benefits may decrease by $4.3 million due to settlements with the tax authorities and/or expiration of applicable statutes before December 31, 2019. We recognize interest and penalties for unrecognized tax benefits in income tax expense. The amounts recognized for interest and penalties during the years ended December 31, 2018, 2017 and 2016 were not material. We accrued $1.7 million and $1.3 million for the payment of interest and penalties at December 31, 2018 and 2017, respectively. We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. We are currently under examination by the Internal Revenue Service for years 2013 and 2014. There are no material state, local or non-U.S. examinations by tax authorities for years prior to 2013. We had the following activity for unrecognized tax benefits:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Balance at beginning of period |  | $ | 21.8 |  |  | $ | 27.4 |  |  | $ | 10.8 |
Tax positions related to current year additions |  | 10.8 |  |  | 2.3 |  |  | 8.4 |
Additions for tax positions of prior years |  | 2.6 |  |  | — |  |  | 9.7 |
Tax positions related to prior years reductions |  | (0.2 | ) |  | (7.3 | ) |  | (0.3 | )
Reductions due to lapse of statute of limitations on tax positions |  | (1.2 | ) |  | — |  |  | (0.4 | )
Settlements |  | — |  |  | (0.6 | ) |  | (0.8 | )
Balance at end of period |  | $ | 33.8 |  |  | $ | 21.8 |  |  | $ | 27.4 |
Tax Reform On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code that impacted the 2017 tax year, including (1) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries (“Transition Tax”) and (2) allowing bonus depreciation for the full expensing of qualified property. The Tax Act also established new tax laws that affected the 2018 tax year and will affect future tax years, including, but not limited to: (1) reduction of the U.S. federal corporate tax rate from 35% to 21%; (2) a new limitation on deductible interest expense; (3) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (4) elimination of the corporate alternative minimum tax (AMT); (5) a new provision designed to tax global intangible low-taxed income (GILTI); (6) the creation of the base erosion anti-abuse tax (BEAT), a new minimum tax; (7) limitations on the deductibility of certain executive compensation; and (8) changing rules related to uses of and limitations of net operating losses (NOLs) generated after December 31, 2017. ASC 740, Income Taxes, requires companies to recognize the impact of tax law changes in the period of enactment; however, Staff Accounting Bulletin (SAB) No. 118 provided that companies could record provisional amounts related to the Tax Act during a measurement period not to exceed one year from the Tax Act enactment date. Our accounting for the Tax Act was completed in the fourth quarter of 2018. Consistent with SAB 118, we included reasonable estimates of certain aspects of the Tax Act as of December 31, 2017, as follows: Impact on DTAs and DTLs from reduction of U.S. federal corporate tax rate We computed the impact of the reduced tax rate (from 35% to 21%) on our U.S. federal DTAs and DTLs, which were remeasured as of December 31, 2017. We also computed the provisional impact on our valuation allowance as it relates to our U.S. federal DTAs and DTLs and appropriately adjusted our valuation allowance as of December 31, 2017. The provisional net impact on our 2017 tax provision related to the remeasuring of DTAs, DTLs, and the associated valuation allowance as a result of the reduced U.S. federal corporate tax rate was a $9.9 million tax benefit. During the fourth quarter of 2018, we completed our accounting for the remeasured federal DTAs and DTLs and corresponding valuation allowance. Included in this net amount was tax expense of $51.3 million related to remeasured deferred taxes, offset by the tax benefit of the remeasured corresponding valuation allowance of $51.3 million, which represented a change from the provisional amount recorded in the year ended December 31, 2017 of $20.3 million. All such amounts offset and had no net impact on the effective tax rate. Deemed Repatriation Transition Tax As of December 31, 2017, we recorded a provision estimate of the taxable income subject to the Transition Tax of $102.6 million, which we expected to be fully offset by NOLs and not result in a cash tax obligation. During the fourth quarter of December 31, 2018, we completed our accounting for the Transition Tax. Based upon the guidance available at the time of filing of our 2017 federal income tax return, we were able to utilize foreign tax credits (“FTC”) to offset all of the Transition Tax. Our ability to utilize FTCs to absorb the Transition Tax resulted in the preservation of federal NOLs for this aspect of the Tax Act. Valuation Allowances As of December 31, 2017, the amount of valuation allowance needed was based on provisional amounts recorded in connection with the Tax Act; therefore, a portion of the valuation allowance was provisional. During the fourth quarter of December 31, 2018, we completed our accounting for all provisional items and recorded an additional valuation allowance of $20.3 million, as disclosed above. Global Intangible Low Taxed Income As of December 31, 2017, we did not make a provisional adjustment for the impact of GILTI. During the fourth quarter of December 31, 2018, we completed our accounting for GILTI. As part of completing that process, we have made the election to account for GILTI as a current-period expense when incurred; accordingly, we included $33.6 million of a taxable income inclusion related to GILTI in our U.S. income tax provision for the year ended December 31, 2018.

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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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