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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax expense (benefit) components recognized in Cont Ops follow:
| Year Ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal (a) | $ | 961 |  |  | $ | (121,411) |  |  | $ | (36,591) |
Foreign | 40,823 |  |  | 133,810 |  |  | 159,876 |
State and local | (4,754) |  |  | 5,343 |  |  | 4,295 |
Total current | 37,030 |  |  | 17,742 |  |  | 127,580 |
Deferred: |  |  |  |  |
Federal | — |  |  | 17,451 |  |  | 325,351 |
Foreign | (20,541) |  |  | (19,337) |  |  | 9,593 |
State and local | — |  |  | — |  |  | 19,441 |
Total deferred | (20,541) |  |  | (1,886) |  |  | 354,385 |
Total income tax expense | $ | 16,489 |  |  | $ | 15,856 |  |  | $ | 481,965 |
(a) The CARES Act allows entities to carry back 2019 loss to prior periods of up to five years and claim refunds of federal taxes paid. The Company has filed the refund claim with the IRS and received a refund of $49 million in the third quarter of 2020 and expect a refund of $72 million in 2022. A reconciliation of U.S. statutory federal income tax expense (benefit) to income tax expense (benefit) from Cont Ops follows:
| Year Ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
U.S. statutory federal tax expense (benefit) | $ | (26,818) |  |  | $ | 734 |  |  | $ | (176,288) |
Increase (decrease) in taxes resulting from: |  |  |  |  |
State and local income taxes | 12,777 |  |  | (10,817) |  |  | (5,128) |
U.S. tax on GILTI | — |  |  | 3,835 |  |  | 21,433 |
NCI | (6,718) |  |  | (9,143) |  |  | 13,209 |
Foreign tax differential, net | (23,315) |  |  | (10,386) |  |  | 3,989 |
Valuation allowance, net | 99,663 |  |  | 146,930 |  |  | 659,203 |
Other changes to uncertain tax positions | 895 |  |  | 7,484 |  |  | 4,098 |
Stranded tax effects from AOCI | (51,782) |  |  | — |  |  | (35,619) |
CARES Act benefit | 2,188 |  |  | (124,753) |  |  | — |
Other, net | 9,599 |  |  | 11,972 |  |  | (2,932) |
Total income tax expense | $ | 16,489 |  |  | $ | 15,856 |  |  | $ | 481,965 |
Deferred taxes reflect the tax effects of differences between the amounts recorded as assets and liabilities for financial reporting purposes and the amounts recorded for income tax purposes. The tax effects of significant temporary differences giving rise to deferred tax assets and liabilities are as follows:
| December 31,
(in thousands) | 2021 |  | 2020
Deferred tax assets: |  |  |
Accrued liabilities not currently deductible: |  |  |
Employee compensation and benefits | $ | 138,034 |  |  | $ | 104,305 |
Project and non-project reserves | 67,861 |  |  | 71,999 |
Net operating loss carryforward | 346,561 |  |  | 326,402 |
Tax basis of investment in excess of book basis | 144,019 |  |  | 118,915 |
U.S. foreign tax credit carryforward | 455,912 |  |  | 414,348 |
AOCI | 26,982 |  |  | 62,681 |
Other | 26,794 |  |  | 103,955 |
Total deferred tax assets | 1,206,163 |  |  | 1,202,605 |
Valuation allowance | (1,114,574) |  |  | (1,080,752) |
Deferred tax assets, net | $ | 91,589 |  |  | $ | 121,853 |
Deferred tax liabilities: |  |  |
Book basis of property and equipment in excess of tax basis | (31,197) |  |  | (43,475) |
Dividend withholding on unremitted non-U.S. earnings | (55,080) |  |  | (57,859) |
Other | (21,539) |  |  | (23,349) |
Total deferred tax liabilities | (107,816) |  |  | (124,683) |
Deferred tax assets, net of deferred tax liabilities | $ | (16,227) |  |  | $ | (2,830) |
As of December 31, 2021, we are indefinitely reinvested only with respect to unremitted earnings required to meet our working capital and long-term investment needs in the foreign jurisdictions within which we operate. Beyond those limits, we expect current earnings to be available for distribution. Deferred tax liabilities of approximately $31 million have not been recorded with respect to unremitted earnings that are considered indefinitely reinvested, again primarily associated with foreign withholding and income taxes that would be due upon remittance. We have no intention of initiating any actions that would lead to taxation of the earnings deemed indefinitely reinvested. As of December 31, 2021, tax credit carryforwards, principally federal, and tax loss carryforwards, principally federal, state, and foreign, were as follows:
(in thousands) | Federal FTC |  | Federal NOLs |  | State NOLs |  | Foreign NOLs
Expiration periods: |  |  |  |  |  |  |
2022 - 2026 | $ | 94,317 |  |  | $ | — |  |  | $ | 10,932 |  |  | $ | 40,177 |
2027-2031 | 361,595 |  |  | — |  |  | 34,034 |  |  | 56,255 |
2032-2041 | — |  |  | — |  |  | 351,159 |  |  | 5,783 |
Indefinite | — |  |  | 163,099 |  |  | 131,680 |  |  | 1,177,047 |
During 2021 and 2020, we were in a three-year cumulative loss on a consolidated, jurisdictional basis in Australia, the Netherlands, the U.K. and the U.S. Such cumulative loss constitutes significant negative evidence (with regards to future taxable income) for assessing likelihood of realization. We also considered positive evidence but concluded it did not outweigh this significant negative evidence of a three-year cumulative loss. Accordingly, we recognized non-cash charges to tax expense of $10 million and $142 million to record a valuation allowance against net U.S. deferred tax assets and $42 million and $28 million against certain net foreign deferred tax assets during 2021 and 2020, respectively. We also reduced a valuation allowance for $18 million in AOCI against net deferred tax assets primarily related to the Netherlands' pension settlement that occurred in the fourth quarter of 2021. In the normal course of business, we are subject to examination by taxing authorities worldwide, including such major jurisdictions as Australia, Canada, Chile, the Netherlands, the U.K. and the U.S. Although we believe our reserves for our tax positions are reasonable, the outcome of tax audits could be materially different, both favorably and unfavorably. With a few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2012. A summary of unrecognized tax benefits follows:
(in thousands) | 2021 |  | 2020
Balance at beginning of year | $ | 48,413 |  |  | $ | 42,394 |
Change in tax positions of prior years | — |  |  | 8,166 |
Change in tax positions of current year | — |  |  | — |
Reduction in tax positions for statute expirations | (514) |  |  | (1,510) |
Reduction in tax positions for audit settlements | — |  |  | (637) |
Balance at end of year | $ | 47,899 |  |  | $ | 48,413 |
If recognized, the total amount of unrecognized tax benefits as of December 31, 2021 and 2020, would favorably impact the effective tax rates by $30 million in both years. We had $13 million and $11 million of accrued interest and penalties as of December 31, 2021 and 2020, respectively. We do not anticipate any significant changes to the unrecognized tax benefits within the next twelve months. U.S. and foreign earnings (loss) from Cont Ops before taxes are as follows:
| Year Ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
United States | $ | (176,271) |  |  | $ | (276,041) |  |  | $ | (873,189) |
Foreign | 48,566 |  |  | 279,535 |  |  | 33,724 |
Total | $ | (127,705) |  |  | $ | 3,494 |  |  | $ | (839,465) |

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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