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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our income before income taxes was subject to taxes in the following jurisdictions for the following periods (in millions):
Years Ended December 31,
202420232022
United States$(1,485.7)$3.5 $97.8 
Foreign12.5 31.3 44.1 
Total$(1,473.2)$34.8 $141.9 
The provision (benefit) for income taxes is comprised of (in millions):
Years Ended December 31,
202420232022
Current tax provision:
Federal$3.8 $7.0 $9.8 
State6.8 7.1 5.7 
Foreign11.2 6.8 6.4 
21.8 20.9 21.9 
Deferred tax provision (benefit):
Federal(39.3)(36.3)(42.6)
State(1.6)(37.0)7.9 
Foreign(6.4)(7.8)(3.2)
(47.3)(81.1)(37.9)
Income tax (benefit) provision$(25.5)$(60.2)$(16.0)
Significant components of our deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in millions):
December 31,
20242023
Deferred tax assets:
Operating loss carryforwards$126.8 $132.3 
Tax credit carryforwards66.0 58.7 
ASC Topic 842 lease liability438.8 461.1 
Deemed landlord financing297.1 252.3 
Other95.2 103.9 
Total deferred tax assets1,023.9 1,008.3 
Valuation allowance for deferred tax assets(57.4)(47.7)
Deferred tax assets, net of valuation allowance966.5 960.6 
Deferred tax liabilities:
Basis difference related to fixed assets(231.7)(209.9)
Basis difference related to intangible assets with an indefinite life(303.1)(337.1)
ASC Topic 842 ROU assets(397.6)(425.3)
Other(6.8)(9.3)
Total deferred tax liabilities(939.2)(981.6)
Net deferred tax assets (liabilities) are shown on the accompanying consolidated balance sheets as follows:
Balance Sheet Location
Non-current deferred tax assetsOther assets, net52.2 15.7 
Non-current deferred tax liabilities Deferred taxes, net(24.9)(36.7)
Deferred tax assets (liabilities), net$27.3 $(21.0)
The net change in net deferred taxes in 2024 of $48.3 million is primarily due to an impairment of Topgolf intangibles and the depreciation of Topgolf acquisition related deferred tax liabilities.
The valuation allowance on our deferred tax assets as of December 31, 2024 and 2023 relate primarily to state net operating loss carryforwards and tax credits of $25.1 million, and net operating loss carryforwards in the United Kingdom and Germany of $25.7 million.
As of December 31, 2024, we had federal and state income tax credit carryforwards of $56.6 million and $33.3 million, respectively, which will expire if unused at various dates beginning on December 31, 2028. Such carryforwards expire as follows (in millions):
U.S. foreign tax credit$2.8 2028-2034
U.S. business tax credits$53.8 2037-2047
State business tax credits - indefinite lived$28.1 Do not expire
State business tax credits - definite lived$5.2 2033-2047
As of December 31, 2024, we had federal, Germany, and United Kingdom net operating loss (“NOL”) carryforwards of $357.6 million and interest expense carryforwards of $50.3 million, respectively. Such carryforwards expire as follows (in millions):
U.S. loss carryforwards - definite lived$13.3  2028-2037
U.S. loss carryforwards - indefinite lived$109.2  Do not expire
U.S. interest expense carryforwards$50.3  Do not expire
Germany loss carryforwards$147.0 Do not expire
United Kingdom loss carryforwards$88.1 Do not expire
Our ability to utilize the NOLs and credits to offset future taxable income may be deferred or limited significantly if we were to experience an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). In general, an ownership change will occur if there is a cumulative change in ownership of our stock by “5-percent shareholders” (as defined in the Code) that exceeds 50 percentage points over a rolling three-year period. We determined that an ownership change has occurred for purposes of Section 382 on the date of the Topgolf merger. Topgolf experienced an ownership change in November 2021. As such, all of our federal NOLs and tax credits are limited to an annual Section 382 limitation on the utilization of our tax attributes. This change is not expected to have any material effect on our results of operations or statements of financial position. In addition, Topgolf’s NOLs are presently expected to be subject to “separate return limitation year” limitations. Separate return limitation year NOLs can only be used in years that both the consolidated group and the entity that created such NOLs have taxable income, which may limit our ability to utilize Topgolf’s NOLs in the future. Therefore, our ability to utilize Topgolf tax attributes to offset future taxable income may be deferred or limited significantly.
A reconciliation of the effective tax rate on income or loss and the statutory tax rate is as follows:
Years Ended December 31,
202420232022
Statutory U.S. tax rate21.0 %21.0 %21.0 %
State income taxes, net of U.S. tax benefit(0.3)%(67.7)%7.1 %
Foreign income taxed at other than U.S. statutory rate0.8 %(26.0)%(8.9)%
Federal tax credits1.0 %(46.6)%(8.7)%
Goodwill impairment(19.4)%— %— %
Other non-deductible expenses(0.2)%6.0 %1.0 %
Non-deductible compensation(0.5)%17.9 %4.5 %
U.S. Foreign tax inclusion— %0.4 %1.0 %
Foreign derived intangible income deduction0.2 %(7.5)%(3.0)%
Impact of uncertain tax positions— %8.5 %(0.8)%
Change in deferred tax valuation allowance(0.9)%(88.5)%(23.0)%
Withholding tax impacts on foreign subsidiaries— %5.5 %— %
Other— %4.3 %(1.5)%
Effective tax rate1.7 %(172.7)%(11.3)%
The most significant item impacting our tax provision in 2024 is the impairment of Topgolf goodwill, which is non-deductible for tax purposes, which was originally recorded as part of its acquisition in 2021.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
202420232022
Balance at January 1$29.3 $26.2 $26.6 
Additions based on tax positions related to the current year2.1 1.8 1.7 
Additions for tax positions of prior years— 2.0 1.2 
Reductions for tax positions of prior years(0.8)— (1.5)
Settlement of tax audits(1.1)— — 
Reductions due to lapsed statute of limitations(1.8)(0.7)(1.8)
Balance at December 31$27.7 $29.3 $26.2 
As of December 31, 2024, the gross liability for income taxes associated with uncertain tax benefits was $27.7 million. This liability could be reduced by $4.2 million of offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, which was recorded as a long-term income tax receivable, as well as $7.6 million of deferred taxes. The net amount of $15.9 million, if recognized, would affect our financial statements and favorably affect our effective income tax rate.
We expect the unrecognized tax benefit liabilities to decrease approximately $2.4 million during the next 12 months.
We recognize interest and penalties related to income tax matters in the income tax provision. We recognized a tax benefit of $0.3 million, $0.1 million, and $0.3 million, for the years ended December 31, 2024, 2023 and 2022, respectively, related to interest and penalties. As of December 31, 2024 and 2023, the gross amount of accrued interest and penalties included in income taxes payable in the accompanying consolidated balance sheets was $2.6 million and $2.9 million, respectively.
We or one of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various U.S. states and foreign jurisdictions. We are generally no longer subject to income tax examinations by tax authorities in our major jurisdictions as follows:
Major Tax JurisdictionYears No Longer Subject to Audit
U.S. Federal2010 and prior
Germany2018 and prior
Japan2018 and prior
South Korea2021 and prior
United Kingdom2020 and prior
As of December 31, 2024, we had $79.6 million of undistributed foreign earnings and profits. Pursuant to the Tax Act, our undistributed foreign earnings and profits were deemed repatriated as of December 31, 2017 and subsequent foreign profits are not expected to be subject to U.S. income tax upon repatriation. We have not provided deferred tax liabilities for foreign withholding taxes and certain state income taxes on the undistributed earnings and profits from certain non-U.S. subsidiaries that will be permanently reinvested outside the United States and expect the net impact of any future repatriations of permanently reinvested earnings on our overall tax liability to be insignificant. For jurisdictions in which we are not permanently reinvested, we have estimated and accrued $2.5 million for the net impact on our overall tax liability.