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Income Taxes | 9 Months Ended
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Sep. 30, 2017
Income Taxes |
Income Taxes | 9. Income Taxes The Company’s effective tax rate was 37.71% and 38.43% for the three months ended September 30, 2017 and 2016, respectively, and 37.25% and 37.54% for the nine months ended September 30, 2017 and 2016, respectively. The Company is subject to examination by the Internal Revenue Service (“IRS”) and tax authorities in states in which the Company has significant business operations. The tax years under examination and open for examination vary by jurisdiction. There are currently no federal examinations under way; however, refund claims and tax returns for certain years are being reviewed by state jurisdictions. No material unanticipated adjustments were made by the IRS in the years most recently examined. The Company’s income tax returns for 2014 and subsequent tax years generally remain subject to examination by U.S. federal and foreign jurisdictions, and 2013 and subsequent years are subject to examination by state taxing authorities. A reconciliation of the amount of unrecognized tax benefits is as follows for the nine months ended September 30, 2017 and 2016:
|  | Nine Months Ended September 30,
|  | 2017 |  | 2016
|  |  |  |  | Interest |  |  |  |  |  |  |  | Interest |  |  |
|  |  |  |  | and |  |  |  |  |  |  |  | and |  |  |
(dollars in thousands) |  | Tax |  | Penalties |  | Total |  | Tax |  | Penalties |  | Total
Balance at January 1, |  | $ | 127,085 |  | $ | 9,965 |  | $ | 137,050 |  | $ | 5,903 |  | $ | 2,935 |  | $ | 8,838
Additions for current year tax positions |  |  | 1,727 |  |  | — |  |  | 1,727 |  |  | 6,268 |  |  | 1,117 |  |  | 7,385
Additions for Reorganization Transactions |  |  | — |  |  | 226 |  |  | 226 |  |  | 115,877 |  |  | 5,459 |  |  | 121,336
Additions for prior years' tax positions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accrual of interest and penalties |  |  | — |  |  | 295 |  |  | 295 |  |  | — |  |  | 95 |  |  | 95
Reductions for prior years' tax positions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expiration of statute of limitations |  |  | (258) |  |  | (152) |  |  | (410) |  |  | (530) |  |  | (215) |  |  | (745)
Other |  |  | — |  |  | — |  |  | — |  |  | (12) |  |  | (1) |  |  | (13)
Balance at September 30, |  | $ | 128,554 |  | $ | 10,334 |  | $ | 138,888 |  | $ | 127,506 |  | $ | 9,390 |  | $ | 136,896
Included in the balance of unrecognized tax benefits was $11.2 million and $10.9 million of unrecognized tax benefits for the nine months ended September 30, 2017 and 2016, respectively, that, if recognized, would impact the effective tax rate. In connection with the Reorganization Transactions discussed below, the Company recorded interest and penalties of $0.2 million for the nine months ended September 30, 2017 and unrecognized tax benefits and interest and penalties of $115.9 million and $5.5 million, respectively, for the nine months ended September 30, 2016. Included in the balance of the unrecognized tax benefits as of September 30, 2017 was $93.9 million attributable to tax refund claims with respect to tax years 2005 through 2012 in the State of California. Such refund claims were filed by the Company in 2015, on behalf of the Company and its affiliates, including BOW, concerning the determination of taxes for which no benefit is currently recognized. It is reasonably possible that the amount of unrecognized tax benefits could decrease within the next 12 months by as much as $107.2 million of taxes and $5.4 million of accrued interest and penalties as a result of settlements and the expiration of the statute of limitations in various states. The Company recognizes interest and penalties attributable to both unrecognized tax benefits and undisputed tax adjustments in the provision for income taxes. For the nine months ended September 30, 2017 and 2016, the Company recorded $0.4 million and $0.2 million, respectively, of net expense attributable to interest and penalties. The Company had a liability of $12.5 million and $12.1 million as of September 30, 2017 and December 31, 2016, respectively, for accrued interest and penalties, of which $10.3 million and $10.0 million as of September 30, 2017 and December 31, 2016, respectively, were attributable to unrecognized tax benefits and the remainder was attributable to tax adjustments which are not expected to be in dispute. Prior to the Reorganization Transactions, the Company filed consolidated U.S. Federal and combined state tax returns that incorporated the tax receivables and unrecognized tax benefits of FHB and BOW. The consummation of the Reorganization Transactions did not relieve the Company of the pre-Reorganization Transactions tax receivables and unrecognized tax benefits recognized by BOW that were included in the Company's consolidated and combined tax returns. As a result, on April 1, 2016, the Company recorded $72.8 million related to current tax receivables, $116.6 million related to unrecognized tax benefits, and an indemnification payable of $28.6 million. Additionally, in connection with the Reorganization Transactions, the Company incurred certain tax-related liabilities related to the distribution of its interest in BWHI amounting to $95.4 million. The amount necessary to pay the distribution taxes (net of the expected federal tax benefit of $33.4 million) was paid by BNPP to the Company on April 1, 2016. The Company expects that any future refunds or adjustments to such taxes will be reimbursed to, or funded by, BWHI or its affiliates pursuant to a tax sharing agreement entered into on April 1, 2016 and pursuant to certain tax allocation agreements entered into among the parties. Accordingly, the assumption of the pre-Reorganization Transactions tax receivables, unrecognized tax benefits and distribution tax liabilities and the offsetting indemnification receivables or payables were reflected as equity contributions and distributions on April 1, 2016. If there are any future adjustments to the indemnified tax receivables or unrecognized tax benefits, an offsetting adjustment to the indemnification receivables or payables will be recorded to the provision for income taxes and other noninterest income or expense.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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