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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes
7. Income Taxes
The components of pretax income from continuing operations, generally based on the jurisdiction of the legal entity, were as follows:
 Year Ended December 31,
 202020192018
Components of pre-tax (loss) income:   
Domestic$(1,032,549)$30,960 $190,291 
Foreign(281,696)168,678 208,122 
 $(1,314,245)$199,638 $398,413 
The provision for income taxes relating to continuing operations consists of the following:
 Year Ended December 31,
 202020192018
Current portion:   
Federal$(5,067)$4,488 $(49,518)
State and Local(435)3,781 4,168 
Non U.S.11,823 49,982 59,743 
Total current6,321 58,251 14,393 
Deferred portion:  
Federal(34,295)(14,215)55,502 
State and Local(4,533)(1,692)(4,812)
Non U.S.(7,406)(7,018)(7,591)
Total deferred(46,234)(22,925)43,099 
Total provision for income taxes$(39,913)$35,326 $57,492 

The provision for income taxes relating to continuing operations differs from amounts computed at the statutory federal income tax rate as follows:
 Year Ended December 31,
 202020192018
Income tax provision at statutory federal income tax rate$(275,992)$41,924 $83,667 
State income taxes, net of federal benefit(15,126)2,223 (42)
Impact of non U.S. taxing jurisdictions, net31,207 13,121 1,714 
Impact of U.S. TCJA(1)
— — (26,730)
Employee stock based compensation13,985 8,380 3,884 
Research tax credit(11,328)(28,593)(9,818)
Tax receivable agreement (TRA)(2)
— (536)1,019 
Valuation Allowance201,863 957 3,878 
Other, net15,478 (2,150)(80)
Total provision for income taxes$(39,913)$35,326 $57,492 
___________________________
(1)In 2018, amount includes adjustments for deferred taxes and foreign tax effects.
(2)Amount includes adjustments to the TRA, which are not taxable.

The Tax Receivable Agreement ("TRA") provided for payments to Pre-IPO Existing Stockholders (as defined below) for cash savings for U.S. federal income tax realized as a result of the utilization of Pre-IPO Tax Assets (as defined below). These cash savings would be realized at the enacted statutory tax rate effective in the year of utilization. In 2018, we finalized the 2017 U.S. federal income tax return and utilized additional Pre-IPO Tax Assets in the return, primarily as a result of electing to utilize our net operating loss ("NOLs") against our one-time transition tax income. As a result of the change in estimated NOL utilization at the higher corporate income tax rate in 2017 we recorded an increase to our liability of $5 million related to the TRA, which is reflected in our 2018 income from continuing operations before taxes. During 2019, we decreased the TRA liability by $3 million as a result of certain audit and transfer pricing adjustments recorded during the period, which is reflected in our 2019 income from continuing operations before taxes.
Additionally, during the year ended December 31, 2018, we reduced the provisional net discrete tax cost associated with the TCJA by $27 million to $20 million upon further analysis of certain aspects of the TCJA and subsequently published administrative guidance, and refinement of our calculations.
The components of our deferred tax assets and liabilities are as follows:
 As of December 31,
 20202019
Deferred tax assets:  
Employee benefits other than pension$21,903 $23,272 
Lease liabilities22,108 9,415 
Deferred revenue33,824 30,715 
Pension obligations27,865 27,407 
Tax loss carryforwards259,035 59,939 
Incentive consideration4,158 6,722 
Tax credit carryforwards47,110 18,496 
Suspended loss14,528 14,635 
Accrued expenses1,797 7,547 
Other— 533 
Total deferred tax assets432,328 198,681 
Deferred tax liabilities: 
Exchangeable notes(19,114)— 
Right of use assets(21,376)(9,261)
Depreciation and amortization(8,284)(7,059)
Software developed for internal use(19,917)(66,918)
Intangible assets(110,625)(120,528)
Unrealized gains and losses(24,109)(18,778)
Non U.S. operations(15,674)(16,149)
Investment in partnership(7,565)(7,306)
Other(2,974)— 
Total deferred tax liabilities(229,638)(245,999)
Valuation allowance(251,253)(38,272)
Net deferred tax (liability)$(48,563)$(85,590)
As a result of the enactment of the TCJA, we recorded a one-time transition tax on the undistributed earnings of our foreign subsidiaries. We do not consider undistributed foreign earnings to be indefinitely reinvested as of December 31, 2020, with certain limited exceptions and have recorded corresponding deferred taxes. We consider the undistributed capital investments in our foreign subsidiaries to be indefinitely reinvested as of December 31, 2020, and have not provided deferred taxes on any outside basis differences. Determination of the amount of unrecognized deferred tax liability, if any, related to indefinitely reinvested capital investments is not practicable.
As of December 31, 2020, we have U.S. federal NOL carryforwards of approximately $749 million, which primarily have an indefinite carryforward period. Additionally, we have research tax credit carryforwards of approximately $18 million, which will expire between 2021 and 2041. As a result of the acquisition of Radixx and other prior business combinations, $33 million of our U.S. federal NOLs are subject to the annual limit on the ability of a corporation to use certain tax attributes (as defined in Section 382 of the Code) with the majority expiring between 2023 and 2037. However, we expect that Section 382 will not limit our ability to fully realize the tax benefits. We have state NOLs of $20 million which will expire primarily between 2021 and 2041 and state research tax credit carryforwards of $20 million which will expire between 2023 and 2040. We have $415 million of NOL carryforwards and $12 million of foreign tax credits related to certain non-U.S. taxing jurisdictions that are primarily from countries with indefinite carryforward periods.
We regularly review our deferred tax assets for realizability and a valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible. When assessing the need for a valuation allowance, all positive and negative evidence is analyzed, including our ability to carry back NOLs to prior periods, the reversal of deferred tax liabilities, tax planning strategies and projected future taxable income. Significant losses related to COVID-19 resulted in a three-year cumulative loss in certain jurisdictions, which represents significant negative evidence regarding the ability to realize deferred tax assets. As a result, we established a valuation allowance on a portion of our U.S. deferred tax assets of $165 million as of December 31, 2020. We also established and maintained a U.S. state valuation allowance on current year losses and other deferred tax assets of $15 million and $5 million as of December 31, 2020 and 2019, respectively. For non-U.S. deferred tax assets of certain subsidiaries, we established and maintained a valuation allowance on current year losses and other deferred tax assets of $71 million and $33 million as of December 31, 2020 and 2019, respectively. We reassess these assumptions regularly which could cause an increase or decrease to the valuation allowance. This assessment could result in an increase or decrease in the effective tax rate which could materially impact our results of operations.
It is our policy to recognize penalties and interest accrued related to income taxes as a component of the provision for income taxes from continuing operations. During the years ended December 31, 2020, 2019 and 2018, we recognized an
expense of $6 million, benefit of $7 million and expense of $1 million, respectively, related to interest and penalties. As of December 31, 2020 and 2019, we had a liability, including interest and penalties, of $96 million and $81 million, respectively, for unrecognized tax benefits, including cumulative accrued interest and penalties of approximately $23 million and $16 million, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
 Year Ended December 31,
 202020192018
Balance at beginning of year$64,645 $70,327 $74,388 
Additions for tax positions taken in the current year3,090 5,149 4,450 
Additions for tax positions of prior years7,504 12,679 2,612 
Additions for tax positions from acquisitions— 1,294 — 
Reductions for tax positions of prior years— (19,611)(5,831)
Reductions for tax positions of expired statute of limitations(656)(1,192)(3,143)
Settlements(1,529)(4,001)(2,149)
Balance at end of year$73,054 $64,645 $70,327 
We present unrecognized tax benefits as a reduction to deferred tax assets for NOLs, similar tax loss or a tax credit carryforward that is available to settle additional income taxes that would result from the disallowance of a tax position, presuming disallowance at the reporting date. The amount of unrecognized tax benefits that were offset against deferred tax assets was $56 million, $48 million and $55 million as of December 31, 2020, 2019, and 2018 respectively.
As of December 31, 2020, 2019, and 2018, the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $55 million, $48 million and $51 million, respectively. We believe that it is reasonably possible that $5 million in unrecognized tax benefits may be resolved in the next twelve months, due to statute of limitations expiration.
In the normal course of business, we are subject to examination by taxing authorities throughout the world. The following table summarizes, by major tax jurisdiction, our tax years that remain subject to examination by taxing authorities:
Tax JurisdictionYears Subject to Examination
United Kingdom2016 - forward
Singapore2016 - forward
India1996 - 2015
Uruguay2015 - forward
U.S. Federal2014, 2015, 2017 - forward
Texas2016 - forward
We currently have ongoing audits in India and various other jurisdictions. We do not expect that the results of these examinations will have a material effect on our financial condition or results of operations. With few exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2010.
Tax Receivable Agreement
Immediately prior to the closing of our initial public offering in April 2014, we entered into the TRA, which provides the right to receive future payments from us to stockholders and equity award holders that were our stockholders and equity award holders, respectively, immediately prior to the closing of our initial public offering (collectively, the "Pre-IPO Existing Stockholders"). In connection with the TRA, we made payments, including interest, of $72 million in January 2020, $105 million in 2019, and $60 million in 2018, respectively. In December 2019, we exercised our right under the terms of the TRA to accelerate our remaining payments under the TRA and make an early termination payment of $1 million, to the Pre-IPO Existing Shareholders, which was included in the January 2020 payment of $72 million described above. As a result, no future payments are required to be made to the Pre-IPO Existing Stockholders under the TRA.