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INCOME TAXES | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of pretax income (loss) from continuing operations for the years ended December 31, 2020, 2019 and 2018 were as follows (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
United States | $ | (55,699) |  |  | $ | 6,758 |  |  | $ | 23,349 |
International | (238,367) |  |  | (20,289) |  |  | (22,318) |
Income (loss) before provision (benefit) for income taxes | $ | (294,066) |  |  | $ | (13,531) |  |  | $ | 1,031 |
The provision (benefit) for income taxes for the years ended December 31, 2020, 2019 and 2018 was allocated between continuing operations and discontinued operations as follows (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Continuing Operations | $ | (7,504) |  |  | $ | 761 |  |  | $ | (957) |
Discontinued Operations | — |  |  | — |  |  | — |
Total | $ | (7,504) |  |  | $ | 761 |  |  | $ | (957) |
The provision (benefit) for income taxes from continuing operations for the years ended December 31, 2020, 2019 and 2018 consisted of the following components (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Current taxes: |  |  |  |  |
U.S. federal | $ | (180) |  |  | $ | (5,901) |  |  | $ | 768 |
State | 1,719 |  |  | 929 |  |  | 57 |
International | (1,942) |  |  | 7,218 |  |  | 3,218 |
Total current taxes | (403) |  |  | 2,246 |  |  | 4,043 |
Deferred taxes: |  |  |  |  |
U.S. federal | 32 |  |  | 32 |  |  | (319) |
State | 114 |  |  | (9) |  |  | — |
International | (7,247) |  |  | (1,508) |  |  | (4,681) |
Total deferred taxes | (7,101) |  |  | (1,485) |  |  | (5,000) |
Provision (benefit) for income taxes | $ | (7,504) |  |  | $ | 761 |  |  | $ | (957) |
The items accounting for differences between the income tax provision (benefit) from continuing operations computed at the U.S. federal statutory rate and the provision (benefit) for income taxes for the years ended December 31, 2020, 2019 and 2018 were as follows (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018 (2)
U.S. federal income tax provision (benefit) at statutory rate | $ | (61,805) |  |  | $ | (2,842) |  |  | $ | 216 |
Foreign income and losses taxed at different rates (1) | 8,608 |  |  | 5,529 |  |  | 2,113 |
State income taxes, net of federal benefits, and state tax credits | 6,487 |  |  | 5,297 |  |  | 720 |
Change in valuation allowances | (4,474) |  |  | (10,074) |  |  | (7,727) |
Effect of income tax rate changes on deferred items | 618 |  |  | (3,443) |  |  | 1,544 |
Tax effects of intercompany transactions | — |  |  | — |  |  | 607 |
Adjustments related to uncertain tax positions | (15,518) |  |  | (12,418) |  |  | 18 |
Non-deductible stock-based compensation expense | 3,803 |  |  | 6,355 |  |  | 3,239 |
Tax (windfalls)/shortfalls on stock-based compensation awards | 3,876 |  |  | 2,042 |  |  | (335) |
Federal research and development credits, net of adjustments | 6,043 |  |  | 3,447 |  |  | (8,331) |
Forgiveness of intercompany liabilities | (2,863) |  |  | 67 |  |  | (1,340) |
Ordinary stock loss | — |  |  | — |  |  | (11,815) |
Net operating loss expiration | 19,962 |  |  | 12,537 |  |  | — |
Goodwill impairment | 23,202 |  |  | — |  |  | — |
Non-deductible or non-taxable items | 4,557 |  |  | (5,736) |  |  | 20,134 |
Provision (benefit) for income taxes | $ | (7,504) |  |  | $ | 761 |  |  | $ | (957) |
(1)Tax rates in foreign jurisdictions were generally lower than the U.S. federal statutory rate through December 31, 2020. This results in an adverse impact to the provision (benefit) for income taxes in this rate reconciliation for the years ended December 31, 2020, 2019 and 2018 prior to the impact of valuation allowances, due to the net pretax losses from continuing operations in certain foreign jurisdictions with lower tax rates. (2)During the year ended December 31, 2019, we updated our net operating losses to remove deferred tax assets that could never be utilized due to IRC Section 382 limitations. The amount of State income taxes, net of federal benefits, and state tax credits, Change in valuation allowances and Non-deductible or non-taxable items for the year ended December 31, 2018 have been updated from $2.0 million, $3.8 million and $7.3 million previously reported to reflect that change. The deferred income tax assets and liabilities consisted of the following components as of December 31, 2020 and 2019 (in thousands):
| December 31,
| 2020 |  | 2019
Deferred tax assets: |  |  |
Accrued expenses and other liabilities | $ | 54,699 |  |  | $ | 35,565 |
Operating lease obligation | 16,279 |  |  | 22,557 |
Stock-based compensation | 5,129 |  |  | 7,657 |
Net operating loss and tax credit carryforwards | 142,835 |  |  | 157,202 |
Intangible assets, net | 22,974 |  |  | 21,002 |
Investments | 24,885 |  |  | 23,012 |
Unrealized foreign currency exchange losses | 1,244 |  |  | 3,765 |
Other | 985 |  |  | 1,017 |
Total deferred tax assets | 269,030 |  |  | 271,777 |
Less: Valuation allowances | (212,143) |  |  | (206,394) |
Deferred tax assets, net of valuation allowance | 56,887 |  |  | 65,383 |
Deferred tax liabilities: |  |  |
Prepaid expenses and other assets | (12,288) |  |  | (16,343) |
Property, equipment and software, net | (8,211) |  |  | (11,994) |
Right-of-use asset | (11,433) |  |  | (20,172) |
Convertible senior notes | (1,163) |  |  | (1,883) |
Deferred revenue | (15,369) |  |  | (14,064) |
Total deferred tax liabilities | (48,464) |  |  | (64,456) |
Net deferred tax asset (liability) | $ | 8,423 |  |  | $ | 927 |
We have incurred significant losses in recent periods and had an accumulated deficit of $1,320.9 million as of December 31, 2020. As a result, we maintained valuation allowances against our domestic deferred tax assets and substantially all of our foreign deferred tax assets as of December 31, 2020 and 2019 to reduce their carrying values to amounts that are realizable either through future reversals of existing taxable temporary differences or through taxable income in carryback years for the applicable jurisdictions. We had $24.1 million of federal net operating loss carryforwards as of December 31, 2020 which will begin expiring in 2027. We had $77.5 million of state net operating loss carryforwards as of December 31, 2020, which began expiring in the current period. As of December 31, 2020, we had $465.2 million of foreign net operating loss carryforwards, a significant portion of which carry forward for an indefinite period. We are subject to taxation in the United States, state jurisdictions and foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related income tax assets and liabilities. We recognize 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 criterion, 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. The following table summarizes activity related to our gross unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2020, 2019 and 2018 (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Beginning Balance | $ | 64,361 |  |  | $ | 87,637 |  |  | $ | 87,359 |
Increases related to prior year tax positions | 8,389 |  |  | 3,754 |  |  | 1,500 |
Decreases related to prior year tax positions | (22,541) |  |  | (28,767) |  |  | (21) |
Increases related to current year tax positions | 1,994 |  |  | 6,086 |  |  | 7,533 |
Decreases based on settlements with taxing authorities | — |  |  | — |  |  | — |
Decreases due to lapse of statute limitations | (5,640) |  |  | (3,875) |  |  | (9,447) |
Foreign currency translation | 2,397 |  |  | (474) |  |  | 713 |
Ending Balance | $ | 48,960 |  |  | $ | 64,361 |  |  | $ | 87,637 |
The total amount of unrecognized tax benefits as of December 31, 2020, 2019 and 2018 that, if recognized, would affect the effective tax rate are $19.9 million, $25.1 million and $33.3 million. We recognized $1.0 million, $1.4 million and $1.6 million of interest and penalties within Provision (benefit) for income taxes on our consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018. Total accrued interest and penalties as of December 31, 2020 and 2019 were $4.9 million and $4.9 million, and are included within Other non-current liabilities in our consolidated balance sheets. We are currently under audit by several foreign jurisdictions. It is likely that the examination phase of some of those audits will conclude in the next 12 months. There are many factors, including factors outside of our control, which influence the progress and completion of those audits. We recognized income tax benefits of $8.9 million, $12.3 million and $7.9 million for the years ended December 31, 2020, 2019 and 2018, as a result of new information that impacted our estimates of the amounts that are more-likely-than not of being realized upon settlement of the related tax positions and due to expirations of the applicable statutes of limitations. We are subject to claims for tax assessments by foreign jurisdictions, including a proposed assessment for $126.4 million, inclusive of estimated incremental interest from the original assessment. We believe that the assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit and we intend to vigorously defend ourselves in that matter. In addition to any potential increases in our liabilities for uncertain tax positions from the ultimate resolution of that assessment, we believe that it is reasonably possible that reductions of up to $3.4 million in unrecognized tax benefits may occur within the 12 months following December 31, 2020 upon closing of income tax audits or the expiration of applicable statutes of limitations. In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. Additionally, while we did not incur the deemed repatriation tax, an actual repatriation from our non-U.S. subsidiaries could be subject to foreign and U.S. state income taxes. Aside from limited exceptions for which the related deferred tax liabilities recognized as of December 31, 2020 and 2019 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts. The actual tax cost resulting from a distribution would depend on income tax laws and circumstances at the time of distribution. Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation. Groupon uses a cost-sharing arrangement under which controlled members agree to share the costs and risks of developing intangible properties in accordance with their reasonably anticipated share of benefits from the intangibles. In 2019, the Ninth Circuit Court of Appeals entered a decision in Altera Corp. v. Commissioner requiring related parties in an intercompany cost-sharing arrangement to share expenses related to stock-based compensation. Altera then petitioned the United States Supreme Court to review the Ninth Circuit's decision. In June 2020, the Supreme Court denied this petition, and accordingly, the Ninth Circuit's Altera decision stands. The Altera decision did not have a material impact on our provision for income taxes for the years ended December 31, 2020 and 2019

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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