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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes |
1 6. | Income Taxes
The United States and foreign components of income before income taxes and equity in earnings in affiliates are as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (In thousands) |
Income before income taxes and equity in earnings in affiliates |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 161,856 |  |  | $ | 96,428 |  |  | $ | 155,844 |
Foreign |  |  | 30,966 |  |  |  | 27,700 |  |  |  | 17,684 |
Income before income taxes and equity in earnings in affiliates |  | $ | 192,822 |  |  | $ | 124,128 |  |  | $ | 173,528 |
The provision for income taxes consists of the following components:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (In thousands) |
Federal income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 20,006 |  |  | $ | 8,259 |  |  | $ | 13,018 |
Deferred |  |  | 71,202 |  |  |  | (255 | ) |  |  | (7,028 | )
|  |  | 91,208 |  |  |  | 8,004 |  |  |  | 5,990 |
State income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 8,564 |  |  |  | 4,146 |  |  |  | 5,093 |
Deferred |  |  | 18,587 |  |  |  | 47 |  |  |  | (383 | )
|  |  | 27,151 |  |  |  | 4,193 |  |  |  | 4,710 |
Foreign income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 7,780 |  |  |  | (3,163 | ) |  |  | (875 | )
Deferred |  |  | (3,409 | ) |  |  | 11,429 |  |  |  | 6,823 |
|  |  | 4,371 |  |  |  | 8,266 |  |  |  | 5,948 |
Total U.S. and foreign provision for income taxes |  | $ | 122,730 |  |  | $ | 20,463 |  |  | $ | 16,648 |
A reconciliation of the statutory U.S. federal tax rate of 21% and the effective income tax rate is as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (In thousands) |
Provisions using statutory federal income tax rate |  | $ | 40,492 |  |  | $ | 26,067 |  |  | $ | 36,476 |
State income taxes, net of federal tax benefit |  |  | 7,921 |  |  |  | 3,099 |  |  |  | 2,421 |
REIT benefit |  |  | — |  |  |  | (12,271 | ) |  |  | (22,395 | )
Change in valuation allowance |  |  | 389 |  |  |  | (1,775 | ) |  |  | 1,456 |
Federal tax credits |  |  | (1,414 | ) |  |  | (2,015 | ) |  |  | (2,118 | )
Foreign income taxes |  |  | 3,802 |  |  |  | 1,373 |  |  |  | 1,934 |
Tax impact of vested equity compensation |  |  | 3,621 |  |  |  | 3,628 |  |  |  | 185 |
Impact of REIT termination |  |  | 70,813 |  |  |  | — |  |  |  | — |
Change in contingent tax liability |  |  | (4,339 | ) |  |  | 143 |  |  |  | 168 |
Other, net |  |  | 1,445 |  |  |  | 2,214 |  |  |  | (1,479 | )
Total provision for income taxes |  | $ | 122,730 |  |  | $ | 20,463 |  |  | $ | 16,648 |
The Company's effective tax rate differs from the U.S. statutory rate of 21% in 2021 primarily due to the non-cash tax expense related to the termination of the REIT status and differs in 2020 and 2019 primarily due to a zero tax rate on earnings generated by the Company's REIT operations. State income taxes, net of federal tax benefits of $7.9 million, $3.1 million and $2.4 million for 2021, 2020 and 2019, respectively, is presented exclusive of the related change in valuation allowance of state income tax deferred items. Net of the related change in valuation allowances the state income taxes, net of federal tax benefits is $8.4 million, $2.1 million and $4.1 million for 2021, 2020 and 2019, respectively. The following table presents the breakdown between non-current net deferred tax assets as classified on the balance sheets as of December 31, 2021 and 2020:
|  | 2021 |  |  | 2020 |
|  | (In thousands) |
Deferred tax assets - non-current |  | $ | — |  |  | $ | 36,604 |
Deferred tax liabilities - non-current |  |  | (80,768 | ) |  |  | (30,726 | )
Total net deferred tax assets |  | $ | (80,768 | ) |  | $ | 5,878 |
The significant components of the Company's deferred tax assets and liabilities consisted of the following as of December 31, 2021 and 2020:
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  | (In thousands) |
Net operating losses |  | $ | 18,022 |  |  | $ | 25,260 |
Accrued liabilities |  |  | 29,473 |  |  |  | 30,605 |
Deferred compensation |  |  | 19,052 |  |  |  | 18,906 |
Accrued compensation |  |  | 6,694 |  |  |  | 7,888 |
Deferred revenue |  |  | 21,134 |  |  |  | 15,210 |
Tax credits |  |  | 3,065 |  |  |  | 3,834 |
Equity awards |  |  | 3,694 |  |  |  | 3,402 |
Depreciation |  |  | — |  |  |  | 3,069 |
Operating lease liability |  |  | 28,756 |  |  |  | 14,889 |
Other, net |  |  | 1,212 |  |  |  | 777 |
Valuation allowance |  |  | (19,322 | ) |  |  | (21,012 | )
Total deferred tax assets |  | $ | 111,780 |  |  | $ | 102,828 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  | $ | (59,057 | ) |  | $ | — |
Intangible assets |  |  | (48,935 | ) |  |  | (21,885 | )
Capitalized transaction costs |  |  | (15,229 | ) |  |  | (16,165 | )
Accounting method change |  |  | (2,334 | ) |  |  | (4,667 | )
Prepaid expenses and other |  |  | (39,739 | ) |  |  | (39,925 | )
Lease right-of-use assets |  |  | (27,254 | ) |  |  | (14,308 | )
Total deferred tax liabilities |  | $ | (192,548 | ) |  | $ | (96,950 | )
Total net deferred tax assets (liabilities) |  | $ | (80,768 | ) |  | $ | 5,878 |
Deferred income taxes should be reduced by a valuation allowance if it is not more likely than not that some portion or all of the deferred tax assets will be realized. On a periodic basis, management evaluates and determines the amount of the valuation allowance required and adjusts such valuation allowance accordingly. At year end 2021 and 2020, the Company has a valuation allowance of $19.3 million and $21.0 million, respectively related to deferred tax assets for foreign net operating losses, state net operating losses and state tax credits. The valuation allowance decreased by $1.7 million during the year ended December 31, 2021. The Company provides income taxes on the undistributed earnings of non-U.S. subsidiaries except to the extent that such earnings are permanently invested outside the United States. At December 31, 2021, $10.3 million of accumulated undistributed earnings of non-U.S. subsidiaries were permanently invested outside the United States. At the existing U.S. federal income and applicable foreign withholding tax rates, additional taxes (net of foreign tax credits) of $0.5 million, consisting solely of withholding taxes, would have to be provided if such earnings were remitted currently. At December 31, 2021, the Company had $2.6 million of Federal net operating loss carryforwards and $204.3 million of combined net operating loss carryforwards in various states which will begin to expire in 2022. The Company has recorded a partial valuation allowance against the deferred tax assets related to the state operating losses. Also, as of the year ended December 31, 2021, the Company had $16.0 million of foreign operating losses which carry forward indefinitely and $2.9 million of state tax credits which will begin to expire in 2022. The Company has recorded a partial valuation allowance against the deferred tax assets related to the foreign operating losses and state tax credits. The Company recognizes the cost of employee services received in exchange for awards of equity instruments based upon the grant date fair value of those awards. The exercise of non-qualified stock options and vesting of restricted stock awards which have been granted under the Company’s equity award plans give rise to compensation income which is includable in the taxable income of the applicable employees and the majority of which is deductible by the Company for federal and state income tax purposes. In the case of non-qualified stock options, the compensation income results from increases in the fair market value of the Company's common stock subsequent to the date of grant. At December 31, 2021, the deferred tax asset net of a valuation allowance related to unexercised stock options and restricted stock grants for which the Company has recorded a book expense was $3.7 million. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (In thousands) |
Balance at Beginning of Period |  | $ | 5,623 |  |  | $ | 5,469 |  |  | $ | 4,584 |
Additions based on tax positions related to the current year |  |  | 133 |  |  |  | 44 |  |  |  | — |
Additions for tax positions of prior years |  |  | 57 |  |  |  | 166 |  |  |  | 994 |
Reductions as a result of a lapse of applicable statutes of limitations |  |  | (4,708 | ) |  |  | (56 | ) |  |  | (109 | )
Balance at End of Period |  | $ | 1,105 |  |  | $ | 5,623 |  |  | $ | 5,469 |
All amounts in the reconciliation are reported on a gross basis and do not reflect a federal tax benefit on state income taxes. The Company has accrued $1.0 million of accrued uncertain tax benefits as of December 31, 2021 which is inclusive of the federal tax benefit on state income taxes. The Company believes that it is reasonably possible that a decrease may be necessary in the unrecognized tax benefits within twelve months of the reporting date of approximately $0.2 million, related to state tax exposures, due to a lapse of the statute of limitation. The accrued uncertain tax balance at December 31, 2021 includes $1.0 million of unrecognized tax benefits which, if ultimately recognized, will reduce the Company’s annual effective tax rate. The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for the years before 2017. The calculation of the Company’s provision (benefit) for income taxes requires the use of significant judgment and involves dealing with uncertainties in the application of complex tax laws and regulations. In determining the adequacy of the Company’s provision (benefit) for income taxes, potential settlement outcomes resulting from income tax examinations are regularly assessed. As such, the final outcome of tax examinations, including the total amount payable or the timing of any such payments upon resolution of these issues, cannot be estimated with certainty. During the years ended December 31, 2021 and 2020, the Company did not recognize any interest and penalties. The Company classifies interest and penalties as interest expense and other expense, respectively.

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