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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company is subject to U.S. federal income taxes and income taxes in numerous U.S. states. In addition, the Company is subject to income tax in the U.K. and Brazil relative to its foreign subsidiaries. Income (loss) before income taxes by geographic area was as follows (in millions):
|  | Years Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Domestic |  | $ | 227.9 |  |  | $ | 192.1 |  |  | $ | 206.6 |
Foreign |  | (0.6 | ) |  | 13.3 |  |  | 12.4 |
Total income (loss) before income taxes |  | $ | 227.3 |  |  | $ | 205.4 |  |  | $ | 219.0 |
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. Generally effective January 1, 2018, the Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent, and creating a territorial tax system that generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries. Federal, state and foreign income tax (benefits) provisions were as follows (in millions):
|  | Years Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Federal: |  |  |  |  |  |
Current |  | $ | 30.9 |  |  | $ | 35.9 |  |  | $ | 44.9 |
Deferred |  | 16.5 |  |  | 2.6 |  |  | (46.9 | )
State: |  |  |  |  |  |
Current |  | 3.8 |  |  | 4.3 |  |  | 3.8 |
Deferred |  | 4.0 |  |  | 0.9 |  |  | 3.9 |
Foreign: |  |  |  |  |  |
Current |  | 2.3 |  |  | 3.9 |  |  | 2.9 |
Deferred |  | (4.3 | ) |  | — |  |  | (3.0 | )
(Benefit) provision for income taxes |  | $ | 53.3 |  |  | $ | 47.6 |  |  | $ | 5.6 |
Actual income tax expense differed from income tax expense computed by applying the applicable U.S. federal statutory corporate tax rate of 21.0% in 2019 and 2018 and 35% in 2017 to income before income taxes, as follows (in millions):
|  | Years Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Provision at the U.S. federal statutory rate |  | $ | 47.7 |  |  | $ | 43.1 |  |  | $ | 76.7 |
Increase (decrease) resulting from: |  |  |  |  |  |
State income tax, net of benefit for federal deduction |  | 5.2 |  |  | 3.6 |  |  | 4.5 |
Foreign income tax rate differential |  | 0.9 |  |  | (0.3 | ) |  | (2.4 | )
Tax Credits |  | (1.1 | ) |  | (1.3 | ) |  | (0.9 | )
Changes in valuation allowances |  | (1.7 | ) |  | 3.4 |  |  | 0.6 |
Tax Act - Enactment date effect |  | — |  |  | (0.6 | ) |  | (73.0 | )
Stock-based compensation |  | — |  |  | (0.1 | ) |  | (0.1 | )
Uncertain tax benefits |  | 0.7 |  |  | 0.4 |  |  | 0.8 |
Other |  | 1.6 |  |  | (0.7 | ) |  | (0.5 | )
(Benefit) provision for income taxes |  | $ | 53.3 |  |  | $ | 47.6 |  |  | $ | 5.6 |
For the year ended December 31, 2019, the Company recorded a tax provision of $53.3 million. The Company recognizes the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, the Company has not provided deferred taxes related to temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period. For the year ended December 31, 2019, the Company estimated it has no GILTI tax liability. The Company's 2019 effective income tax rate was more than the U.S. federal statutory rate of 21.0%, due primarily to: (1) the taxes provided for in U.S. state jurisdictions; and (2) valuation allowances provided for net operating losses and other deferred tax assets in certain U.S. states, partially offset by: (1) reduced valuation allowances provided for net operating losses in Brazil; and (2) tax credits. As a result of these items recorded in 2019 compared to the 2018 items discussed below, the effective tax rate for the year ended December 31, 2019 increased to 23.4%, as compared to 23.2% for the year ended December 31, 2018. The Company's 2018 effective income tax rate was more than the U.S. federal statutory rate of 21.0%, due primarily to: (1) the taxes provided for in U.S. state jurisdictions; and (2) valuation allowances provided for net operating losses and other deferred tax assets in certain U.S. states and in Brazil, partially offset by: (1) income generated in the U.K., which is taxed at a 19.0% statutory rate; (2) employment tax credits; and (3) the enactment date adjustments from the Tax Act. As a result of these items recorded in 2018 compared to the 2017 items discussed below, the effective tax rate for the year ended December 31, 2018 increased to 23.2%, as compared to 2.5% for the year ended December 31, 2017. During 2017, the Company recorded a tax provision of $5.6 million. This included the tax benefit for the deferred tax impact of the Tax Act noted above, as well as excess tax deductions for restricted stock resulting from the adoption of ASU 2016-09, which were partially offset by certain expenses for stock-based compensation recorded in 2017 that were non-deductible for income tax purposes. For the year ended December 31, 2017, the Company also provided valuation allowances with respect to deferred tax assets primarily relating to goodwill and net operating losses of certain Brazil subsidiaries, as well as state net operating losses in the U.S., based on expectations concerning their realizability. As a result of these items, the effective tax rate for the year ended December 31, 2017 was 2.5%. Deferred income tax provisions resulted from temporary differences in the recognition of income and expenses for financial reporting purposes and for tax purposes. The tax effects of these temporary differences representing deferred tax assets/liabilities resulted principally from the following (in millions):
|  | December 31,
|  | 2019 |  | 2018
Deferred tax assets: |  |  |  |
Loss reserves and accruals |  | $ | 42.8 |  |  | $ | 41.8 |
Interest rate swaps |  | 1.3 |  |  | — |
U.S. state net operating loss (“NOL”) carryforwards |  | 38.2 |  |  | 17.9 |
Depreciation expense |  | — |  |  | 0.4 |
Foreign NOL carryforwards |  | 37.6 |  |  | 37.6 |
Operating lease liabilities |  | 55.5 |  |  | — |
Other |  | 1.5 |  |  | 0.1 |
Deferred tax assets |  | 176.9 |  |  | 97.8 |
Valuation allowance on deferred tax assets |  | (69.7 | ) |  | (52.3 | )
Net deferred tax assets |  | $ | 107.2 |  |  | $ | 45.6 |
Deferred tax liabilities: |  |  |  |
Goodwill and intangible franchise rights |  | $ | (135.1 | ) |  | $ | (123.7 | )
Depreciation expense |  | (68.0 | ) |  | (50.2 | )
Interest rate swaps |  | — |  |  | (2.8 | )
Operating lease ROU assets |  | (45.4 | ) |  | — |
Other |  | — |  |  | (0.1 | )
Deferred tax liabilities |  | (248.5 | ) |  | (176.7 | )
Net deferred tax liability |  | $ | (141.3 | ) |  | $ | (131.1 | )
The classification of the Company’s net deferred tax liability within the Consolidated Balance Sheets is as follows (in millions):
|  | December 31,
|  | 2019 |  | 2018
Deferred tax asset, included in Other long-term assets |  | $ | 4.4 |  |  | $ | 3.6 |
Deferred tax liability, included in Deferred income taxes |  | (145.7 | ) |  | (134.7 | )
Net deferred tax liability |  | $ | (141.3 | ) |  | $ | (131.1 | )
As of December 31, 2019, the Company had state pre-tax NOL carryforwards in the U.S. of $620.1 million that will expire between 2020 and 2039, and foreign pre-tax NOL carryforwards of $113.2 million that may be carried forward indefinitely. To the extent that the Company expects that net income will not be sufficient to realize these NOLs in certain jurisdictions, a valuation allowance has been established. The Company believes it is more likely than not that its deferred tax assets, net of valuation allowances provided, will be realized, based primarily on its expectation of future taxable income, considering future reversals of existing taxable temporary differences. As of December 31, 2019, the Company had two controlled foreign corporations that own its foreign operations (the “Foreign Subsidiaries”). The Company has not provided for U.S. deferred taxes on the outside basis differences of its Foreign Subsidiaries, as the Company has taken the position that its investment in the Foreign Subsidiaries will be permanently reinvested outside the U.S. The book basis for one of the Company’s Foreign Subsidiaries that consists of the Company’s U.K. operations exceeded the tax basis by approximately $21.9 million, as of December 31, 2019. If a taxable event resulting in the recognition of these outside basis differences occurred, the resulting tax would not be material. Based on the statutes of limitations in the applicable jurisdiction in which the Company operates, the Company is generally no longer subject to examinations by U.S. tax authorities in years prior to 2015, by U.K. tax authorities in years prior to 2015 and by Brazil tax authorities in years prior to 2014. A reconciliation of the Company’s unrecognized tax benefits is as follows (in millions):
| 2019 |  | 2018 |  | 2017
Balance at January 1 | $ | 1.6 |  |  | $ | 1.2 |  |  | $ | — |
Additions for current tax | 1.0 |  |  | 0.6 |  |  | 1.2 |
Additions based on tax positions in prior years | — |  |  | — |  |  | — |
Reductions for tax positions | — |  |  | — |  |  | — |
Settlements with tax authorities | — |  |  | — |  |  | — |
Reductions due to lapse of statutes of limitations | (0.2 | ) |  | (0.1 | ) |  | — |
Balance at December 31 | $ | 2.4 |  |  | $ | 1.6 |  |  | $ | 1.2 |
Included in the balance of unrecognized tax benefits as of December 31, 2019, 2018 and 2017, are $2.1 million, $1.4 million and $1.0 million, respectively, of tax benefits that would affect the effective tax rate if recognized. For the years ended December 31, 2019, 2018, and 2017 the Company recorded approximately $0.3 million, $0.2 million, $0.2 million, respectively, of interest and penalty related to its uncertain tax positions. Consistent with prior practice, the Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the Consolidated Statements of Operations.

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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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