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v3.22.4

Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Total income before income taxes, classified by source of income, was as follows:
| Year Ended December 31,
(in thousands) | 2022 |  | 2021 |  | 2020
U.S. | $ | 409,666 |  |  | $ | 355,408 |  |  | $ | 38,475 |
Outside the U.S. | 27,140 |  |  | 21,084 |  |  | 14,531 |
Income from continuing operations before income taxes | $ | 436,806 |  |  | $ | 376,492 |  |  | $ | 53,006 |
The provision for income taxes, classified by the timing and location of payment, was as follows:
| Year Ended December 31,
(in thousands) | 2022 |  | 2021 |  | 2020
Current tax expense |  |  |  |  |
Federal | 103,275 |  |  | $ | 71,573 |  |  | $ | 14,345 |
State | 20,068 |  |  | 15,605 |  |  | 4,303 |
Foreign | 2,331 |  | 1,041 |  |  | 2,300 |
Deferred tax (benefit) expense |  |  |  |  |
Federal | (18,974) |  |  | (2,690) |  |  | (12,333) |
State | (4,163) |  |  | (1,254) |  |  | (1,953) |
Foreign | 2,117 |  |  | 3,260 |  |  | (29,043) |
Income tax expense (benefit) | $ | 104,654 |  |  | $ | 87,535 |  |  | $ | (22,381) |
Net deferred tax assets as of December 31, 2022 were as follows:
| December 31,
(in thousands) | 2022 |  | 2021
Deferred tax assets: |  |  |
Accrued compensation | $ | 17,044 |  |  | $ | 13,997 |
Deferred revenue | 46,758 |  |  | 36,666 |
Receivable, net | 8,599 |  |  | 11,776 |
Tax credits | 16,379 |  |  | 14,217 |
Operating lease liabilities | 19,715 |  |  | 6,621 |
Partnership interests | 3,948 |  |  | 4,398 |
Foreign net operating losses | 8,245 |  |  | 7,478 |
Non-U.S. intellectual property | 17,642 |  |  | 21,402 |
Other | 5,589 |  |  | 5,727 |
Total gross deferred tax assets | 143,919 |  |  | 122,282 |
Less: Valuation allowance | (21,402) |  |  | (19,734) |
Deferred tax assets | $ | 122,517 |  |  | $ | 102,548 |
Deferred tax liabilities: |  |  |
Property, equipment and intangible assets | $ | (15,585) |  |  | $ | (28,276) |
Operating lease ROU assets | (17,703) |  |  | (4,350) |
Other | (1,047) |  |  | (1,279) |
Deferred tax liabilities | (34,335) |  |  | (33,905) |
Net deferred tax assets | $ | 88,182 |  |  | $ | 68,643 |
The Company assesses all positive and negative evidence to estimate whether sufficient future taxable income will be generated to use deferred tax assets. Based on this evaluation, the Company recorded a net change to its valuation allowance of $1.7 million due to a $2.2 million increase related to state tax credits, partially offset by a $0.5 million decrease related to foreign deferred tax assets. The Company has $16.4 million of state income tax credit carryforwards. It is more likely than not that these benefits will not be realized. Accordingly, the Company has provided a full valuation allowance against these credit carryforwards. The Company has also provided a tax-effected valuation allowance of $5.0 million on its foreign deferred tax assets, as it believes it is more likely than not that some of these benefits will not be realized. As of December 31, 2022, the Company had gross foreign net operating losses ("NOLs") of $31.4 million, all of which have indefinite carryforward lives. The Company has recorded a tax-effected valuation allowance of $1.8 million for these NOLs, primarily related to France and India. In addition, the Company has a Dutch deferred tax asset of $17.6 million, for which it has recorded a valuation allowance of $3 million. The Dutch valuation allowance did not change in 2022. The statutory United States federal income tax rate reconciles to the effective income tax rates for continuing operations as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Statutory U.S. federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit | 3.0 | % |  | 3.1 | % |  | 4.6 | %
Benefits related to foreign operations | 0.1 | % |  | (0.2) | % |  | (4.2) | %
Expenses (benefits) related to compensation, net | 1.0 | % |  | 0.5 | % |  | (5.8) | %
Unrecognized tax positions | 0.2 | % |  | 0.2 | % |  | 4.7 | %
International Reorganization | — | % |  | 1.1 | % |  | (65.2) | %
Tax credits | (1.5) | % |  | (1.8) | % |  | (15.2) | %
Valuation allowance | 0.5 | % |  | (0.2) | % |  | 17.5 | %
Other | (0.3) | % |  | (0.4) | % |  | 0.4 | %
Effective income tax rates | 24.0 | % |  | 23.3 | % |  | (42.2) | %
The Company's effective income tax rates from continuing operations were 24.0%, 23.3%, and (42.2)% for the years ended December 31, 2022, 2021 and 2020, respectively. The effective income tax rates for the years ended December 31, 2022 and December 31, 2021 were higher than the U.S. federal income tax rate of 21.0% primarily due to state income taxes and tax expense related to compensation, partially offset by federal income tax credits. The effective income tax rate for the year ended December 31, 2021 was also higher due to a reduction in the net carrying value of its Dutch deferred tax asset. As of December 31, 2022, 2021 and 2020, the Company’s gross unrecognized tax benefits totaled $11.9 million, $11.1 million, and $10.2 million, respectively. After considering the deferred income tax accounting impact, it is expected that approximately $8.1 million of the total as of December 31, 2022 would favorably affect the effective tax rate if resolved in the Company’s favor. The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:
(in thousands) | 2022 |  | 2021 |  | 2020 |
Balance, January 1 | $ | 11,147 |  |  | $ | 10,193 |  |  | $ | 7,738 |  |
Changes for tax positions of prior years | (31) |  |  | 156 |  |  | 1,174 |  |
Increases for tax positions related to the current year | 1,650 |  |  | 1,618 |  |  | 1,281 |  |
Settlements and lapsing of statutes of limitations | (890) |  |  | (820) |  |  | — |  |
Balance, December 31 | $ | 11,876 |  |  | $ | 11,147 |  |  | $ | 10,193 |  |
It is reasonably possible that the Company’s unrecognized tax benefits could decrease within the next 12 months by as much as $10.5 million due to settlements and the expiration of applicable statutes of limitations. The Company's federal income tax returns for tax years 2015 and 2016 are currently under examination by the Internal Revenue Service for a tax credit refund claim. The Company's federal income tax return for tax years 2017 and 2018 are also under examination by the Internal Revenue Service. Further, the Company's federal income tax returns for tax years 2019, 2020, and 2021 are subject to examination by the Internal Revenue Service. The practice of the Company is to recognize interest and penalties related to income tax matters in the provision for income taxes. The Company did not incur any material interest or penalties for 2022, 2021, and 2020. The Company had $0.3 million and $0.4 million of accrued interest and penalties on December 31, 2022 and 2021, respectively. The Tax Cuts and Jobs Act subjects a U.S. shareholder to a minimum tax on “global intangible low-taxed income” (“GILTI”) earned by certain foreign subsidiaries. The practice of the Company is to recognize the tax expense on GILTI as a period expense in the period the tax is incurred. The Company has incurred tax on GILTI for the year ended December 31, 2022.

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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