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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company’s consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes attributable to non-controlling interests. The following table presents the consolidated provision for income taxes:
|  | For the Years Ended December 31,
|  | 2016 |  | 2017 |  | 2018
Controlling interest: |  |  |  |  |  |
Current tax |  | $ | 168.1 |  |  | $ | 173.8 |  |  | $ | 117.2 |
Intangible-related deferred taxes |  | 84.3 |  |  | (98.5 | ) |  | 79.7 |
Other deferred taxes |  | (23.2 | ) |  | (24.9 | ) |  | (27.5 | )
Total controlling interest |  | 229.2 |  |  | 50.4 |  |  | 169.4 |
Non-controlling interests: |  |  |  |  |  |  |
Current tax |  | $ | 8.2 |  |  | $ | 8.2 |  |  | $ | 12.2 |
Deferred taxes |  | (1.8 | ) |  | (0.2 | ) |  | (0.3 | )
Total non-controlling interests |  | 6.4 |  |  | 8.0 |  |  | 11.9 |
Income tax expense |  | $ | 235.6 |  |  | $ | 58.4 |  |  | $ | 181.3 |
Income before income taxes (controlling interest) |  | $ | 702.0 |  |  | $ | 739.9 |  |  | $ | 413.0 |
Effective tax rate (controlling interest)(1) |  | 32.6 | % |  | 6.8 | % |  | 41.0 | %
__________________________
(1) | Taxes attributable to the controlling interest divided by Income before income taxes (controlling interest).
The consolidated provision for income taxes consisted of the following:
|  | For the Years Ended December 31,
|  | 2016 |  | 2017 |  | 2018
Current: |  |  |  |  |  |
Federal |  | $ | 103.4 |  |  | $ | 109.0 |  |  | $ | 52.2 |
State |  | 22.9 |  |  | 18.9 |  |  | 28.6 |
Foreign |  | 50.0 |  |  | 54.1 |  |  | 48.6 |
Total current |  | 176.3 |  |  | 182.0 |  |  | 129.4 |
Deferred: |  |  |  |  |  |
Federal |  | 62.3 |  |  | (124.9 | ) |  | 51.3 |
State |  | 10.0 |  |  | 10.4 |  |  | 13.2 |
Foreign |  | (13.0 | ) |  | (9.1 | ) |  | (12.6 | )
Total deferred |  | 59.3 |  |  | (123.6 | ) |  | 51.9 |
Income tax expense |  | $ | 235.6 |  |  | $ | 58.4 |  |  | $ | 181.3 |
For financial reporting purposes, Income before income taxes consisted of the following:
|  | For the Years Ended December 31,
|  | 2016 |  | 2017 |  | 2018
Domestic |  | $ | 688.1 |  |  | $ | 756.5 |  |  | $ | 637.3 |
International |  | 286.5 |  |  | 310.6 |  |  | 76.3 |
|  | $ | 974.6 |  |  | $ | 1,067.1 |  |  | $ | 713.6 |
The following table reconciles the U.S. federal statutory tax rate to the Company’s effective tax rate:
| For the Years Ended December 31,
| 2016 |  | 2017 |  | 2018
Statutory U.S. federal tax rate | 35.0 | % |  | 35.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 2.9 |  |  | 2.7 |  |  | 3.7 |
Effect of foreign operations | (4.6 | ) |  | (5.4 | ) |  | 1.3 |
Effect of changes in tax law, rates | (0.3 | ) |  | (25.2 | ) |  | — |
Reduction in carrying value of an equity method investment | — |  |  | — |  |  | 13.0 |
Other | (0.4 | ) |  | (0.3 | ) |  | 2.0 |
Effective tax rate (controlling interest) | 32.6 | % |  | 6.8 | % |  | 41.0 | %
Effect of income from non-controlling interests | (8.4 | ) |  | (1.3 | ) |  | (15.6 | )
Effective tax rate | 24.2 | % |  | 5.5 | % |  | 25.4 | %
For the year ended December 31, 2018, the effective tax rate (controlling interest) was 41.0% compared to 6.8% for the year ended December 31, 2017. The increase in the effective tax rate (controlling interest) in 2018 was primarily due to a provisional one-time benefit of $194.1 million recorded in 2017 as a result of changes in U.S. tax laws, which did not recur in 2018. The provisional one-time benefit was primarily due to a $216.9 million benefit from the re-measurement of the Company’s deferred tax liabilities associated with its intangible assets and convertible securities, partially offset by a $22.8 million transition tax on deemed repatriated foreign earnings. The increase in the effective tax rate (controlling interest) in 2018 was also due to a $240.0 million expense recorded to reduce the carrying value to fair value of one of the Company’s non-U.S. alternative Affiliates accounted for under the equity method for which the Company did no t recognize an income tax benefit under GAAP. The Company finalized its accounting for the changes in U.S. tax laws in the three months ended December 31, 2018 and no significant adjustments were made to the provisional amount. For the year ended December 31, 2017, the effective tax rate (controlling interest) was 6.8% compared to 32.6% for the year ended December 31, 2016. The decrease in the effective tax rate (controlling interest) in 2017 was primarily due to the provisional one-time benefit recorded for the changes in U.S. tax laws. Deferred income tax liability (net) reflects the expected future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. The significant components of the Company’s Deferred income tax liability (net) are as follows:
|  | December 31,
|  | 2017 |  | 2018
Deferred Tax Assets |  |  |  |
Deferred compensation |  | $ | 10.4 |  |  | $ | 18.0 |
State net operating loss carryforwards |  | 16.8 |  |  | 18.2 |
Foreign loss carryforwards |  | 16.3 |  |  | 16.7 |
Tax benefit of uncertain tax positions |  | 11.4 |  |  | 10.9 |
Deferred income |  | — |  |  | 8.8 |
Accrued expenses |  | 1.3 |  |  | 3.6 |
Other |  | — |  |  | 1.5 |
Total deferred tax assets |  | 56.2 |  |  | 77.7 |
Valuation allowance |  | (24.1 | ) |  | (24.1 | )
Deferred tax assets, net of valuation allowance |  | $ | 32.1 |  |  | $ | 53.6 |
Deferred Tax Liabilities |  |  |  |
Intangible asset amortization |  | $ | (258.6 | ) |  | $ | (337.1 | )
Convertible securities interest |  | (77.9 | ) |  | (84.5 | )
Non-deductible intangible amortization |  | (150.8 | ) |  | (141.0 | )
Deferred income |  | (5.9 | ) |  | — |
Other |  | (6.3 | ) |  | (2.6 | )
Total deferred tax liabilities |  | (499.5 | ) |  | (565.2 | )
Deferred income tax liability (net) |  | $ | (467.4 | ) |  | $ | (511.6 | )
At December 31, 2018, the Company had available state net operating loss carryforwards of $455.0 million, a majority of which will expire over a 15-to-20-year period. At December 31, 2018, the Company had foreign loss carryforwards of $63.1 million, of which $54.1 million will expire over a 20-year period and the balance will carry forward indefinitely. The Company believes that it is more-likely-than-not that the benefit from its state and foreign loss carryforwards will not be fully realized and recorded a valuation allowance of $9.8 million and $14.3 million on the state and foreign loss carryforwards, respectively. For the year ended December 31, 2017, the Company increased its valuation allowance $2.0 million. For the year ended December 31, 2018, the Company made no adjustments to the valuation allowance. The Company continues not to provide for U.S. income taxes on the excess of the financial reporting bases over tax bases in the Company’s investments in foreign subsidiaries considered permanent in duration. Such amount would generally become taxable upon the repatriation of assets from, or a sale or liquidation of, the foreign subsidiaries. While a determination of the potential amount of unrecognized deferred U.S. income tax liability related to these amounts is not practicable because of the numerous assumptions associated with this hypothetical calculation, as of December 31, 2018, the estimated amount of such difference was $225.4 million. A reconciliation of the changes in unrecognized tax benefits is as follows:
|  | For the Years Ended December 31,
|  | 2016 |  | 2017 |  | 2018
Balance, beginning of period |  | $ | 26.9 |  |  | $ | 26.8 |  |  | $ | 32.4 |
Additions based on current year tax positions |  | 3.8 |  |  | 6.0 |  |  | 2.4 |
Additions based on prior years’ tax positions |  | 0.6 |  |  | 1.5 |  |  | 8.4 |
Reduction for prior years’ tax positions |  | — |  |  | — |  |  | (2.0 | )
Reductions related to lapses of statutes of limitations |  | (4.7 | ) |  | (2.3 | ) |  | (6.3 | )
Settlements |  | — |  |  | — |  |  | (1.3 | )
Additions (reductions) related to foreign exchange rates |  | 0.2 |  |  | 0.4 |  |  | (0.5 | )
Balance, end of period |  | $ | 26.8 |  |  | $ | 32.4 |  |  | $ | 33.1 |
Included in the balance of unrecognized tax benefits at December 31, 2016, 2017 and 2018 were $26.0 million, $32.4 million and $33.1 million, respectively, of tax benefits that, if recognized, would favorably affect the Company’s effective tax rate (controlling interest). The Company records accrued interest and penalties, if any, related to unrecognized tax benefits in Income tax expense. The Company had $1.4 million, $1.7 million and $2.1 million in interest related to unrecognized tax benefits accrued at December 31, 2016, 2017 and 2018, respectively, which are included in the table above. For the years ended December 31, 2016, 2017 and 2018, no significant penalties were recorded in Income tax expense. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months. The Company is subject to U.S. federal, state and local, and foreign income tax in multiple jurisdictions and is also periodically subject to tax examinations in these jurisdictions. The completion of examinations may result in the payment of additional taxes and/or the recognition of tax benefits. The Company is generally no longer subject to income tax examinations by U.S. federal, state and local, or foreign taxing authorities for periods prior to 2012.

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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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