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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Tax Cuts and Jobs Act ("TCJA") was enacted on December 22, 2017. The TCJA introduces significant changes in tax law, for example, a reduction in the U.S. federal corporate tax rate from 35% to 21%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings. Companies are required to recognize the effect of tax law changes in the period of enactment, however, due to the complexities involved in accounting for the enactment of TCJA, SEC Staff Accounting Bulletin ("SAB") 118 allows us to record provisional amounts to reflect the impacts of the TCJA during a one-year "measurement period". The Company has recorded the following amounts as provisional due to on-going regulatory guidance, additional analysis and changes in interpretations and assumptions expected over the next twelve months. The Company recorded a tax benefit of $67.9 million which represents the one-time impact of the change in the corporate tax rate on deferred tax assets and liabilities. Although the accounting related to the rate change is complete, we are still analyzing certain aspects of the TCJA and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The one-time transition tax is based on total post-1986 earnings and profits ("E&P") which the Company has previously deferred from U.S. income taxes. An estimated amount was recorded for the one-time transition tax liability, net of the foreign taxes deemed paid, resulting in an increase in income tax expense of $11.0 million. The Company has sufficient foreign tax credits to offset the transition tax, however, the Company has not yet completed its calculation of the total post-1986 foreign E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets are finalized. The Company is still evaluating whether to change its indefinite reinvestment assertion due to certain provisions of the TCJA. Any potential changes to the assertion will be made within the measurement period and accounted for as part of the change in tax law. The Company will continue to analyze the effects of the TCJA on its financial statements and operations. Additional impacts from the enactment of the TCJA will be recorded as they are identified during the measurement period as provided for in SAB 118. Other significant provisions of TCJA that are not yet effective but may impact income taxes in future years include: the inclusion of commissions and performance based compensation in determining the executive compensation limitation, an exemption from U.S. tax on dividends of future foreign earnings, a reduced tax on excess returns of a U.S. corporation from foreign sales (i.e., foreign derived intangibles income or FDII), a minimum tax on certain foreign earnings in excess of 10 percent of the foreign subsidiaries tangible assets (i.e., global intangible low-taxed income or GILTI). The Company is still evaluating whether to make a policy election to treat the GILTI tax as a period expense or to provide U.S. deferred taxes on foreign temporary differences that are expected to generate GILTI income when they reverse in future years. We estimate that the Bipartisan Budget Act of 2018, enacted on February 9, 2018, will reduce the Company’s current income tax liability and net deferred tax asset from the amounts reported at December 31, 2017 by approximately $28.0 million and $19.0 million, respectively, primarily as a result of the extension of the provision allowing a current tax deduction for the costs of certain television productions and the impact of the one-time change in the corporate tax rate on deferred tax assets and liabilities. Income (loss) from continuing operations before income taxes consists of the following components:
(In thousands) | Years Ended December 31,
2017 |  | 2016 |  | 2015
Domestic | $ | 618,955 |  |  | $ | 500,757 |  |  | $ | 566,444 |
Foreign | 21,423 |  |  | (45,932 | ) |  | 16,350 |
Total | $ | 640,378 |  |  | $ | 454,825 |  |  | $ | 582,794 |
Income tax expense attributable to continuing operations consists of the following components:
(In thousands) | Years Ended December 31,
2017 |  | 2016 |  | 2015
Current expense (benefit): |  |  |  |  |
Federal | $ | 162,639 |  |  | $ | 120,634 |  |  | $ | 146,915 |
State | 14,301 |  |  | 11,252 |  |  | 15,713 |
Foreign | 17,382 |  |  | 22,946 |  |  | 14,508 |
| 194,322 |  |  | 154,832 |  |  | 177,136 |
Deferred expense (benefit): |  |  |  |  |
Federal | (38,416 | ) |  | 12,140 |  |  | 12,563 |
State | (2,436 | ) |  | 2,515 |  |  | 1,300 |
Foreign | (7,813 | ) |  | (3,013 | ) |  | 5,753 |
| (48,665 | ) |  | 11,642 |  |  | 19,616 |
Tax expense (benefit) relating to uncertain tax positions, including accrued interest | 5,084 |  |  | (1,612 | ) |  | 4,338 |
Income tax expense | $ | 150,741 |  |  | $ | 164,862 |  |  | $ | 201,090 |
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
(In thousands) | Years Ended December 31,
2017 |  | 2016 |  | 2015
U.S. federal statutory income tax rate | 35 | % |  | 35 | % |  | 35 | %
State and local income taxes, net of federal benefit | 2 |  |  | 2 |  |  | 2 |
Effect of foreign operations | (1 | ) |  | (1 | ) |  | (2 | )
Effect of rate changes on deferred taxes | (11 | ) |  | — |  |  | — |
Transition tax, net of foreign taxes deemed paid | 2 |  |  | — |  |  | — |
Nontaxable income attributable to noncontrolling interests | (1 | ) |  | (1 | ) |  | (1 | )
Changes in the valuation allowance | — |  |  | 5 |  |  | 1 |
Domestic production activity deduction | (3 | ) |  | (3 | ) |  | (3 | )
Tax expense relating to uncertain tax positions, including accrued interest, net of deferred tax benefits | 1 |  |  | (1 | ) |  | 1 |
Other | — |  |  | — |  |  | 1 |
Effective income tax rate | 24 | % |  | 36 | % |  | 34 | %
The tax effects of temporary differences that give rise to significant components of deferred tax assets or liabilities at December 31, 2017 and 2016 are as follows:
(In thousands) | December 31,
2017 |  | 2016
Deferred Tax Asset (Liability) |  |  |
Noncurrent |  |  |
NOLs and tax credit carry forwards | $ | 69,771 |  |  | $ | 82,636 |
Compensation and benefit plans | 30,880 |  |  | 49,710 |
Allowance for doubtful accounts | 370 |  |  | 421 |
Fixed assets and intangible assets | 24,737 |  |  | 46,595 |
Interest rate swap contracts | 1,893 |  |  | 2,884 |
Accrued interest expense | 13,049 |  |  | 11,567 |
Other liabilities | 12,562 |  |  | 20,811 |
Deferred tax asset | 153,262 |  |  | 214,624 |
Valuation allowance | (57,121 | ) |  | (71,563 | )
Net deferred tax asset, noncurrent | 96,141 |  |  | 143,061 |
Prepaid liabilities | (501 | ) |  | (819 | )
Fixed assets and intangible assets | (61,127 | ) |  | (78,616 | )
Investments in partnerships | (103,474 | ) |  | (177,376 | )
Other assets | (20,657 | ) |  | (23,444 | )
Deferred tax liability, noncurrent | (185,759 | ) |  | (280,255 | )
Total net deferred tax liability | $ | (89,618 | ) |  | $ | (137,194 | )
At December 31, 2017, the Company had foreign tax credit carry forwards of approximately $15.0 million, expiring on various dates from 2024 through 2025, and net operating loss carry forwards of approximately $302.1 million related primarily to our foreign subsidiaries. Although the net operating loss carry forward periods range from 5 years to unlimited, the deferred tax assets of approximately $54.0 million for these carry forwards have been reduced by a valuation allowance of approximately $52.3 million as it is more likely than not that these carry forwards will not be realized. The remainder of the valuation allowance at December 31, 2017 relates primarily to deferred tax assets attributable to temporary differences of certain foreign subsidiaries for which it is more likely than not that these deferred tax assets will not be realized. For the year ended December 31, 2017, $1.6 million relating to amortization of tax deductible second component goodwill was realized as a reduction in tax liability (as determined on a 'with-and-without' approach). At December 31, 2017, the liability for uncertain tax positions was $21.8 million, excluding the related accrued interest liability of $4.5 million and deferred tax assets of $4.9 million. All of such unrecognized tax benefits, if recognized, would reduce the Company's income tax expense and effective tax rate. A reconciliation of the beginning to ending amount of the liability for uncertain tax positions (excluding related accrued interest and deferred tax benefit) is as follows:
(In thousands) |
Balance at December 31, 2016 | $ | 18,065 |
Increases related to current year tax positions | 5,154 |
Increases related to prior year tax positions | 293 |
Decreases related to prior year tax positions | (1,595 | )
Decreases due to lapse of statute of limitations | (120 | )
Balance at December 31, 2017 | $ | 21,797 |
Interest expense (net of the related deferred tax benefit) of $1.5 million was recognized during the year ended December 31, 2017 and is included in income tax expense in the consolidated statement of income. At December 31, 2017 and 2016, the liability for uncertain tax positions and related accrued interest noted above are included in other liabilities in the consolidated balance sheets. Under the Company's Tax Disaffiliation Agreement with Cablevision, Cablevision is liable for all income taxes of the Company for periods prior to the spin-off from Cablevision except for New York City Unincorporated Business Tax. The City of New York is currently auditing the Company's General Corporation Tax Return for years 2011 and 2012 and the State of New York is currently auditing the Company's General Business Corporation Franchise Tax Returns for years 2013 and 2014. The State of Georgia is currently auditing the Company's Corporation Tax Returns for years 2013 through 2015. The State of California is currently auditing the Company's California Corporation Franchise or Income Tax Returns for the years 2011 through 2013. The State of Wisconsin is currently auditing the Company's Combined Corporation Franchise or Income Tax Returns for the years 2011 through 2015. The State of Illinois is currently auditing the Company's Corporation Income and Replacement Tax Returns for years 2014 and 2015.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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