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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
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,
|  | 2017 |  | 2018 |  | 2019
Controlling interest: |  |  |  |  |  |
Current taxes |  | $ | 173.8 |  |  | $ | 117.2 |  |  | $ | 46.5 |
Intangible-related deferred taxes |  | (98.5 | ) |  | 79.7 |  |  | (51.3 | )
Other deferred taxes |  | (24.9 | ) |  | (27.5 | ) |  | (4.3 | )
Total controlling interest |  | 50.4 |  |  | 169.4 |  |  | (9.1 | )
Non-controlling interests: |  |  |  |  |  |  |  |
Current taxes |  | $ | 8.2 |  |  | $ | 12.2 |  |  | $ | 12.2 |
Deferred taxes |  | (0.2 | ) |  | (0.3 | ) |  | (0.2 | )
Total non-controlling interests |  | 8.0 |  |  | 11.9 |  |  | 12.0 |
Income tax expense |  | $ | 58.4 |  |  | $ | 181.3 |  |  | $ | 2.9 |
Income before income taxes (controlling interest) |  | $ | 739.9 |  |  | $ | 413.0 |  |  | $ | 6.6 |
Effective tax rate (controlling interest)(1) |  | 6.8 | % |  | 41.0 | % |  | (137.0 | )%
__________________________
(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,
|  | 2017 |  | 2018 |  | 2019
Current: |  |  |  |  |  |
Federal |  | $ | 109.0 |  |  | $ | 52.2 |  |  | $ | (18.2 | )
State |  | 18.9 |  |  | 28.6 |  |  | (8.8 | )
Foreign |  | 54.1 |  |  | 48.6 |  |  | 85.7 |
Total current |  | 182.0 |  |  | 129.4 |  |  | 58.7 |
Deferred: |  |  |  |  |  |
Federal |  | (124.9 | ) |  | 51.3 |  |  | (23.9 | )
State |  | 10.4 |  |  | 13.2 |  |  | 3.4 |
Foreign |  | (9.1 | ) |  | (12.6 | ) |  | (35.3 | )
Total deferred |  | (123.6 | ) |  | 51.9 |  |  | (55.8 | )
Income tax expense |  | $ | 58.4 |  |  | $ | 181.3 |  |  | $ | 2.9 |
For financial reporting purposes, Income before income taxes consisted of the following:
|  | For the Years Ended December 31,
|  | 2017 |  | 2018 |  | 2019
Domestic |  | $ | 756.5 |  |  | $ | 637.3 |  |  | $ | 152.2 |
International |  | 310.6 |  |  | 76.3 |  |  | 155.8 |
|  | $ | 1,067.1 |  |  | $ | 713.6 |  |  | $ | 308.0 |
The following table reconciles the U.S. federal statutory tax rate to the Company’s effective tax rate:
| For the Years Ended December 31,
| 2017 |  | 2018 |  | 2019
Statutory U.S. federal tax rate | 35.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 2.7 |  |  | 3.7 |  |  | 3.5 |
Foreign operations | (5.4 | ) |  | 1.3 |  |  | (471.2 | )
Compensation plans | (0.7 | ) |  | 1.6 |  |  | 240.6 |
Changes in tax laws | (25.2 | ) |  | — |  |  | — |
Changes in valuation allowances | 0.3 |  |  | 0.0 |  |  | (107.2 | )
Unrecognized tax benefits | 0.5 |  |  | 0.5 |  |  | 420.4 |
Affiliate divestments | — |  |  | — |  |  | (120.4 | )
Reduction in carrying value of Affiliates | — |  |  | 13.0 |  |  | — |
Changes in U.S. tax provision to return | (0.0 | ) |  | (1.0 | ) |  | (195.7 | )
Other | (0.4 | ) |  | 0.9 |  |  | 72.0 |
Effective tax rate (controlling interest) | 6.8 | % |  | 41.0 | % |  | (137.0 | )%
Effect of income from non-controlling interests | (1.3 | ) |  | (15.6 | ) |  | 137.9 |
Effective tax rate | 5.5 | % |  | 25.4 | % |  | 0.9 | %
The effective tax rate (controlling interest) in 2017 is lower than the marginal tax rate primarily due to a $194.1 million tax benefit due to changes in U.S. tax laws. The effective tax rate (controlling interest) in 2018 is higher than the marginal tax rate primarily due to a $240.0 million expense recorded to reduce the carrying value to fair value of one of the Company’s Affiliates for which the Company did not recognize an income tax benefit. The effective tax rate (controlling interest) in 2019 is lower than the marginal tax rate primarily due to lower Income before income taxes, as a result of increased Intangible amortization and impairments expense, and tax benefits related to an Affiliate divestment. Deferred income tax liability (net) reflects the expected future tax consequences of temporary differences between the financial reporting bases and tax bases of the Company’s assets and liabilities. The significant components of the Company’s Deferred income tax liability (net) are as follows:
|  | December 31,
|  | 2018 |  | 2019
Deferred Tax Assets |  |  |  |
Deferred compensation |  | $ | 18.0 |  |  | $ | 13.8 |
State net operating loss carryforwards |  | 18.2 |  |  | 15.9 |
Foreign loss carryforwards |  | 16.7 |  |  | 17.7 |
Tax benefit of uncertain tax positions |  | 10.9 |  |  | 27.4 |
Deferred income |  | 8.8 |  |  | 3.0 |
Lease liabilities |  | — |  |  | 12.3 |
Other |  | 5.1 |  |  | 2.6 |
Total deferred tax assets |  | 77.7 |  |  | 92.7 |
Valuation allowance |  | (24.1 | ) |  | (16.9 | )
Deferred tax assets, net of valuation allowance |  | $ | 53.6 |  |  | $ | 75.8 |
Deferred Tax Liabilities |  |  |  |
Intangible asset amortization |  | $ | (337.1 | ) |  | $ | (293.7 | )
Non-deductible intangible amortization |  | (141.0 | ) |  | (110.9 | )
Junior convertible securities interest |  | (84.5 | ) |  | (91.6 | )
Right-of-use assets |  | — |  |  | (10.3 | )
Other |  | (2.6 | ) |  | (4.1 | )
Total deferred tax liabilities |  | (565.2 | ) |  | (510.6 | )
Deferred income tax liability (net)(1) |  | $ | (511.6 | ) |  | $ | (434.8 | )
__________________________
(1) | As of December 31, 2019, the foreign loss carryforwards of $17.7 million, net of a $2.3 million valuation allowance, are presented in Other assets as they represent a net deferred tax asset position in a foreign jurisdiction.
As of December 31, 2019, the Company had available state net operating loss carryforwards of $245.9 million, a majority of which will expire over ten years to 15 years. As of December 31, 2019, the Company had foreign loss carryforwards of $66.9 million, of which $57.6 million will expire over 20 years and $9.3 million will carry forward indefinitely. The Company believed it was more-likely-than-not that the benefit from certain state and foreign loss carryforwards would not be fully realized, and, as of December 31, 2019, had valuation allowances of $12.0 million and $2.3 million on the state and foreign loss carryforwards, respectively. For the years ended December 31, 2018 and 2019, there was no change and a $7.2 million reduction in the valuation allowances, respectively. The Company’s estimates and assumptions regarding the realization of its state and foreign loss carryforwards do not contemplate certain changes in ownership of the Company’s stock which could limit the utilization of these carryforwards. The Company does not 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, 2019, the estimated amount of such difference was $249.4 million. A reconciliation of the changes in unrecognized tax benefits is as follows:
|  | For the Years Ended December 31,
|  | 2017 |  | 2018 |  | 2019
Balance, beginning of period |  | $ | 26.8 |  |  | $ | 32.4 |  |  | $ | 33.1 |
Additions based on current year tax positions |  | 6.0 |  |  | 2.4 |  |  | 39.8 |
Additions based on prior years’ tax positions |  | 1.5 |  |  | 8.4 |  |  | 3.2 |
Reduction for prior years’ tax positions |  | — |  |  | (2.0 | ) |  | (3.5 | )
Reductions related to lapses of statutes of limitations |  | (2.3 | ) |  | (6.3 | ) |  | (4.0 | )
Settlements |  | — |  |  | (1.3 | ) |  | (0.4 | )
Additions (reductions) related to foreign exchange rates |  | 0.4 |  |  | (0.5 | ) |  | (2.8 | )
Balance, end of period |  | $ | 32.4 |  |  | $ | 33.1 |  |  | $ | 65.4 |
Included in the balance of unrecognized tax benefits as of December 31, 2017, 2018 and 2019 were $32.4 million, $33.1 million and $65.4 million, respectively, of tax benefits that, if recognized, would favorably affect the Company’s effective tax rate (controlling interest). As of December 31, 2019, certain of these benefits, if realized, would be offset by the utilization of indirect tax benefits, for which the Company has accrued deferred tax assets of $27.4 million. The Company records accrued interest and penalties, if any, related to unrecognized tax benefits in Income tax expense. For the years ended December 31, 2017, 2018 and 2019, interest and penalties related to unrecognized tax benefits were $0.3 million, $0.4 million and $8.4 million, respectively. As of December 31, 2018 and 2019, the Company had accrued interest and penalties related to unrecognized tax benefits of $2.1 million and $10.5 million, respectively. The Company is subject to U.S. federal, state and local, and foreign income tax in multiple jurisdictions and is 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 2015.

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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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