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v3.22.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2022
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 the non-controlling interests. The following table presents the consolidated provision for income taxes:
|  | For the Years Ended December 31,
|  | 2020 |  | 2021 |  | 2022
Controlling interest: |  |  |  |  |  |
Current taxes |  | $ | 44.6 |  |  | $ | 144.4 |  |  | $ | 315.4 |
Intangible-related deferred taxes |  | (9.9) |  |  | 52.5 |  |  | 32.0 |
Other deferred taxes |  | 34.8 |  |  | 32.7 |  |  | 0.0 |
Total controlling interest |  | 69.5 |  |  | 229.6 |  |  | 347.4 |
Non-controlling interests: |  |  |  |  |  |
Current taxes |  | $ | 10.0 |  |  | $ | 15.4 |  |  | $ | 10.9 |
Deferred taxes |  | 1.9 |  |  | 6.0 |  |  | — |
Total non-controlling interests |  | 11.9 |  |  | 21.4 |  |  | 10.9 |
Income tax expense |  | $ | 81.4 |  |  | $ | 251.0 |  |  | $ | 358.3 |
Income before income taxes (controlling interest) |  | $ | 271.7 |  |  | $ | 795.3 |  |  | $ | 1,493.3 |
Effective tax rate (controlling interest)(1) |  | 25.6 | % |  | 28.9 | % |  | 23.3 | %
__________________________ (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,
|  | 2020 |  | 2021 |  | 2022
Current: |  |  |  |  |  |
Federal |  | $ | (9.6) |  |  | $ | 73.1 |  |  | $ | 222.9 |
State |  | 17.0 |  |  | 19.6 |  |  | 30.6 |
Foreign |  | 47.2 |  |  | 67.1 |  |  | 72.8 |
Total current |  | 54.6 |  |  | 159.8 |  |  | 326.3 |
Deferred: |  |  |  |  |  |
Federal |  | $ | 20.1 |  |  | $ | 55.9 |  |  | $ | 30.4 |
State |  | 5.4 |  |  | 13.0 |  |  | 9.0 |
Foreign |  | 1.3 |  |  | 22.3 |  |  | (7.4) |
Total deferred |  | 26.8 |  |  | 91.2 |  |  | 32.0 |
Income tax expense |  | $ | 81.4 |  |  | $ | 251.0 |  |  | $ | 358.3 |
For financial reporting purposes, Income before income taxes consisted of the following:
|  | For the Years Ended December 31,
|  | 2020 |  | 2021 |  | 2022
Domestic |  | $ | 446.1 |  |  | $ | 698.2 |  |  | $ | 639.0 |
International |  | 62.2 |  |  | 442.8 |  |  | 1,107.4 |
Total |  | $ | 508.3 |  |  | $ | 1,141.0 |  |  | $ | 1,746.4 |
The following table reconciles the U.S. federal statutory tax rate to the Company’s effective tax rate:
|  | For the Years Ended December 31,
|  | 2020 |  | 2021 |  | 2022
Statutory U.S. federal tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit |  | 3.5 |  |  | 3.5 |  |  | 3.5 |
Foreign operations |  | (8.5) |  |  | (1.7) |  |  | (1.7) |
Compensation plans |  | 5.8 |  |  | 2.0 |  |  | 0.8 |
Changes in tax laws |  | 3.0 |  |  | 2.4 |  |  | — |
Change in valuation allowances |  | 6.9 |  |  | 1.1 |  |  | 0.3 |
Unrecognized tax benefits |  | (1.1) |  |  | 0.1 |  |  | 0.4 |
BPEA(1) |  | — |  |  | — |  |  | (1.0) |
Affiliate divestments |  | (6.2) |  |  | — |  |  | — |
Changes in U.S. tax provision to return |  | 0.8 |  |  | 0.4 |  |  | 0.0 |
Other |  | 0.4 |  |  | 0.1 |  |  | 0.0 |
Effective tax rate (controlling interest) |  | 25.6 | % |  | 28.9 | % |  | 23.3 | %
Effect of income from non-controlling interests |  | (9.6) |  |  | (6.9) |  |  | (2.8) |
Effective tax rate |  | 16.0 | % |  | 22.0 | % |  | 20.5 | %
__________________________ (1)Reflective of the BPEA Transaction gain of $641.9 million and realized and unrealized gains on EQT ordinary shares of $43.8 million and $57.9 million, respectively. The Company’s effective tax rate (controlling interest) in 2020 is not significantly different from the marginal tax rate. The effective tax rate (controlling interest) in 2021 is higher than the marginal tax rate, primarily due to non-deductible compensation expense and an increase in deferred tax expense resulting from the revaluation of certain deferred tax liabilities due to an increase in the UK tax rate enacted during 2021. The effective tax rate (controlling interest) in 2022 is lower than the marginal rate primarily due to the tax benefits of foreign operations and a state tax benefit related to the BPEA Transaction. 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,
|  | 2021 |  | 2022
Deferred Tax Assets |  |  |  |
Deferred compensation |  | $ | 12.5 |  |  | $ | 14.6 |
State loss carryforwards |  | 16.9 |  |  | 16.4 |
Foreign loss carryforwards |  | 22.2 |  |  | 20.0 |
Tax benefit of uncertain tax positions |  | 17.4 |  |  | 12.6 |
Lease liabilities |  | 7.6 |  |  | 6.6 |
Foreign tax credits |  | 8.7 |  |  | 15.4 |
Other |  | 1.3 |  |  | 0.3 |
Total deferred tax assets |  | 86.6 |  |  | 85.9 |
Valuation allowance |  | (43.9) |  |  | (48.1) |
Deferred tax assets, net of valuation allowance |  | $ | 42.7 |  |  | $ | 37.8 |
Deferred Tax Liabilities |  |  |  |
Intangible asset amortization |  | $ | (255.9) |  |  | $ | (280.9) |
Non-deductible intangible amortization |  | (149.2) |  |  | (109.8) |
Junior convertible securities interest |  | (101.7) |  |  | (72.4) |
Right-of-use assets |  | (5.9) |  |  | (5.1) |
Accrued expenses |  | — |  |  | (3.0) |
Deferred income |  | (27.3) |  |  | (23.4) |
Other |  | (4.0) |  |  | (4.4) |
Total deferred tax liabilities |  | (544.0) |  |  | (499.0) |
Deferred income tax liability (net)(1) |  | $ | (501.3) |  |  | $ | (461.2) |
__________________________ (1)As of December 31, 2021 and 2022, foreign loss carryforwards of $22.2 million (net of a $20.3 million valuation allowance) and $20.0 million (net of a $16.5 million valuation allowance), respectively, are presented within Other assets as they represent a net deferred tax asset in a foreign jurisdiction. As of December 31, 2022, the Company had available state net operating loss carryforwards of $238.8 million, a majority of which will expire over seven years to 12 years. As of December 31, 2022, the Company had foreign loss carryforwards of $75.7 million, of which $58.8 million will expire over ten years to 18 years and $16.9 million will carry forward indefinitely. As of December 31, 2022, the Company had foreign tax credit carryforwards of $15.4 million which will expire over six years to ten years. The Company believed it was more-likely-than-not that the benefit from certain state and foreign loss carryforwards and foreign tax credit carryforwards would not be fully realized, and, as of December 31, 2022, had valuation allowances of $16.1 million, $16.5 million, and $15.4 million on the state and foreign loss carryforwards and the foreign tax credit carryforwards, respectively. For the years ended December 31, 2021 and 2022, the Company increased its valuation allowance $8.3 million and $4.2 million, 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, 2022, the estimated amount of such difference was $322.9 million. A reconciliation of the changes in unrecognized tax benefits is as follows:
|  | For the Years Ended December 31,
|  | 2020 |  | 2021 |  | 2022
Balance, beginning of period |  | $ | 65.4 |  |  | $ | 63.5 |  |  | $ | 52.4 |
Additions based on current year tax positions |  | 1.1 |  |  | 0.8 |  |  | 0.6 |
Additions based on prior years’ tax positions |  | 1.7 |  |  | 4.6 |  |  | 4.4 |
Reduction for prior years’ tax positions |  | (0.4) |  |  | (5.6) |  |  | (1.0) |
Lapse of the statute of limitations |  | (7.6) |  |  | (5.7) |  |  | (5.5) |
Settlements |  | — |  |  | (5.5) |  |  | — |
Foreign currency translation |  | 3.3 |  |  | 0.3 |  |  | (1.3) |
Balance, end of period |  | $ | 63.5 |  |  | $ | 52.4 |  |  | $ | 49.6 |
Included in the balance of unrecognized tax benefits as of December 31, 2020, 2021, and 2022 were $63.5 million, $52.4 million, and $49.6 million, respectively, of tax benefits that, if recognized, would favorably affect the Company’s effective tax rate (controlling interest). As of December 31, 2022 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 $12.6 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, 2020, 2021, and 2022 interest and penalties related to unrecognized tax benefits were $0.8 million, $(0.4) million, and $2.6 million, respectively. As of December 31, 2021 and 2022, the Company accrued interest and penalties related to unrecognized tax benefits of $11.0 million and $13.6 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 2017.

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