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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | (22) Income Taxes The components of our income before income taxes are as follows:
|  | 2021 |  | 2020 |  | 2019
Income (Loss) before income taxes: |  |  |  |  |  |
Domestic |  | $ | 308,514 |  |  | $ | (45,973) |  |  | $ | (79,821) |
Foreign |  | 11,026 |  |  | (97,437) |  |  | 14,721 |
Total |  | $ | 319,540 |  |  | $ | (143,410) |  |  | $ | (65,100) |
The components of income tax provision for the years ended December 31, 2021, 2020 and 2019 are as follows:
|  | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |  |
U.S. federal |  | $ | (8,675) |  |  | $ | 1,294 |  |  | $ | (135) |
State |  | 2,097 |  |  | 451 |  |  | 801 |
Foreign |  | 6,861 |  |  | 5,645 |  |  | 7,220 |
Total |  | 283 |  |  | 7,390 |  |  | 7,886 |
Deferred: |  |  |  |  |  |
U.S. federal |  | — |  |  | 67 |  |  | (1,008) |
State |  | — |  |  | — |  |  | — |
Foreign |  | (2,795) |  |  | (1,273) |  |  | (2,346) |
Total |  | (2,795) |  |  | (1,206) |  |  | (3,354) |
Total income tax (benefit) provision |  | $ | (2,512) |  |  | $ | 6,184 |  |  | $ | 4,532 |
The overall effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2021, 2020 and 2019 as follows:
|  | % of Pretax Loss
|  | 2021 |  | 2020 |  | 2019
Tax provision based on the federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase in valuation allowances |  | (10.4) |  |  | (8.5) |  |  | (21.3) |
Dividends not taxable |  | — |  |  | 9.5 |  |  | — |
Net operating loss carryback claim |  | — |  |  | 6.2 |  |  | — |
Change in carryforward attributes |  | (0.7) |  |  | (3.2) |  |  | — |
Global intangible low-taxed income inclusion |  | 1.2 |  |  | (0.3) |  |  | (7.0) |
Nondeductible expenses |  | 1.4 |  |  | (13.5) |  |  | (1.8) |
Taxes related to distributions |  | — |  |  | — |  |  | (0.8) |
Foreign income tax rate differential |  | — |  |  | (3.3) |  |  | 1.0 |
Deemed income related to foreign operations |  | — |  |  | (1.6) |  |  | (0.5) |
Tax rate change |  | (0.7) |  |  | (0.3) |  |  | (1.1) |
Employee share-based payments |  | (1.3) |  |  | (1.4) |  |  | — |
Other |  | — |  |  | (0.4) |  |  | (0.9) |
Deferred and payable adjustments |  | 1.4 |  |  | (2.6) |  |  | 3.3 |
ASU 842 adoption |  | — |  |  | — |  |  | (0.1) |
State taxes, net of federal benefit, before valuation allowance |  | 1.0 |  |  | 0.5 |  |  | 2.8 |
Return to provision adjustments |  | (0.1) |  |  | 0.9 |  |  | (2.5) |
Other tax credits |  | (0.5) |  |  | 0.2 |  |  | (1.9) |
Uncertain tax positions and audit settlements |  | (3.0) |  |  | (7.5) |  |  | 2.8 |
Divestitures |  | (10.1) |  |  | — |  |  | — |
Effective tax rate |  | (0.8) | % |  | (4.3) | % |  | (7.0) | %
The difference between our effective tax rate for 2021 and the federal statutory rate was 21.8 percentage points. The difference in the effective rate is primarily due to differences in book and stock bases related to the divestitures of Cimatron and Simbionix, valuation allowance changes, and adjustments to uncertain tax positions, provisions for GILTI, and non-deductible expenses. The difference between our effective tax rate for 2020 and the federal statutory rate was 25.3 percentage points. The difference in the effective rate is primarily due to valuation allowance changes, nondeductible impairment charges, dividends not taxable, net operating loss carryback claim, and adjustments to uncertain tax positions. The difference between our effective tax rate for 2019 and the federal statutory rate was 28.0 percentage points. The difference in the effective rate is primarily due to valuation allowance changes, provisions for Global Intangible Low Taxed Income ("GILTI"), prior period adjustments and adjustments to uncertain tax positions. In 2021, 2020 and 2019, there were no significant changes to our valuation allowance assertions. We continue to review results of operations and forecast estimates to determine if it is more likely than not that the deferred tax assets will be realized. The components of our net deferred income tax assets and net deferred income tax (liabilities) at December 31, 2021 and 2020 are as follows:
(in thousands) |  | 2021 |  | 2020
Deferred income tax assets: |  |  |  |
Intangibles |  | $ | 10,950 |  |  | $ | 17,395 |
Stock options and restricted stock awards |  | 8,005 |  |  | 2,544 |
Reserves and allowances |  | 8,692 |  |  | 10,450 |
Net operating loss carryforwards |  | 38,394 |  |  | 67,025 |
Tax credit carryforwards |  | 19,967 |  |  | 18,813 |
Accrued liabilities |  | 2,893 |  |  | 6,077 |
Deferred revenue |  | 8,141 |  |  | 4,637 |
Lease Tax Asset |  | 10,362 |  |  | 8,343 |
163(j) Limitation Carryforward |  | — |  |  | 2,854 |
Valuation allowance |  | (91,165) |  |  | (123,113) |
Total deferred income tax assets |  | 16,239 |  |  | 15,025 |
Deferred income tax liabilities: |  |  |  |
Intangibles |  | 2,356 |  |  | 2,548 |
Property, plant, and equipment |  | 2,110 |  |  | 2,662 |
Lease Tax Liability |  | 8,458 |  |  | 6,379 |
Other |  | 434 |  |  | 1,345 |
Total deferred income tax liabilities |  | 13,358 |  |  | 12,934 |
Deferred income tax asset held for sale |  | $ | — |  |  | $ | 560 |
Net deferred income tax assets |  | $ | 2,881 |  |  | $ | 1,531 |
At December 31, 2021, $38,394 of our deferred income tax assets was attributable to $279,684 of gross net operating loss carryforwards, which consisted of $84,869 of loss carryforwards for U.S. federal income tax purposes, $144,455 of loss carryforwards for U.S. state income tax purposes and $50,360 of loss carryforwards for foreign income tax purposes. $23,797 of gross net operating loss carryforwards for U.S. federal income tax purposes are acquisition related and are subject to potential measurement period adjustments under ASC 805. $1,304 of gross net operating loss carryforwards for U.S. federal income tax purposes will expire in 2037. All other loss carryforwards for U.S. federal income tax purposes do not expire. The net operating loss carryforwards for U.S. state income tax purposes begin to expire in 2022. In addition, certain loss carryforwards for foreign income tax purposes begin to expire in 2024 and certain other loss carryforwards for foreign purposes do not expire. At December 31, 2021, tax credit carryforwards included in our deferred income tax assets consisted of $8,411 of research and experimentation credit carryforwards for U.S. federal income tax purposes, $4,201 of research and experimentation tax credit carryforwards for U.S. state income tax purposes, $6,629 of foreign tax credits for U.S. federal income tax purposes, and $729 of other state tax credits. Certain state research and experimentation and other state credits began to expire in 2021. We have recorded a valuation allowance related to the U.S. federal and state tax credits. Due to the one time transition tax, our previously unremitted earnings have been subjected to U.S. federal income tax, although, other additional taxes such as, withholding tax, could be applicable. We intend to permanently reinvest its earnings outside the U.S. and as such, have not provided for any additional taxes on approximately $121,509 of unremitted earnings. We believe the unrecognized deferred tax liability related to these earnings is approximately $5,210. Including interest and penalties, we decreased our unrecognized benefits by $10,300 for the year ended December 31, 2021 and increased our unrecognized tax benefits by $1,659 for the year ended December 31, 2021. The decrease was primarily related to the release of unrecognized tax benefits due to the receipt of two favorable U.S. private letter rulings and the settlement of an audit in a foreign jurisdiction. We do not anticipate any additional unrecognized tax benefits during the next 12 months that would result in a material change to our consolidated financial position. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $5,596. We include interest and penalties in the consolidated financial statements as a component of income tax expense.
|  | Unrecognized Tax Benefits*
(in thousands) |  | 2021 |  | 2020 |  | 2019
Balance at January 1 |  | $ | (25,902) |  |  | $ | (15,467) |  |  | $ | (13,031) |
Increases related to prior year tax positions |  | (467) |  |  | (10,426) |  |  | (2,684) |
Decreases related to prior year tax positions |  | 8,886 |  |  | 788 |  |  | 857 |
Decreases related to prior year tax positions as a result of lapse of statute |  | 371 |  |  | — |  |  | — |
Decreases related to settlement |  | 1,043 |  |  | — |  |  | — |
Increases related to current year tax positions |  | (553) |  |  | (797) |  |  | (609) |
Increases related to acquired tax positions |  | (639) |  |  | — |  |  | — |
Balance at December 31 |  | $ | (17,261) |  |  | $ | (25,902) |  |  | $ | (15,467) |
* The unrecognized tax benefit balance includes an insignificant amount of interest and penalties. Tax years 2013 through 2020 remain subject to examination by the U.S. Internal Revenue Service (“IRS”). State income tax returns are generally subject to examination for a period of three to four years after filing the respective tax returns. The tax years 2016 through 2020 remain open to examination by the various foreign taxing jurisdictions to which the Company is subject. The following presents the changes in the balance of our deferred income tax asset valuation allowance:
Year Ended |  | Item |  | Balance at beginning of year |  | Additions (reductions) charged to expense |  | Other |  | Balance at end of year
2021 |  | Deferred income tax asset valuation allowance |  | $ | 123,113 |  |  | $ | (31,948) |  |  | $ | — |  |  | $ | 91,165 |
2020 |  | Deferred income tax asset valuation allowance |  | 109,643 |  |  | 13,470 |  |  | — |  |  | 123,113 |
2019 |  | Deferred income tax asset valuation allowance |  | $ | 95,398 |  |  | $ | 14,245 |  |  | $ | — |  |  | $ | 109,643 |

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