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Income Taxes | 12 Months Ended
--- | ---
Mar. 31, 2017
Income Tax Disclosure [Abstract] |
Income Tax Disclosure | Income Taxes The components of pretax income, net of intercompany eliminations, are as follows:
| Year Ended March 31,
| 2017 |  | 2016 |  | 2015
| (Amounts in millions)
United States | $ | (409.2 | ) |  | $ | (244.2 | ) |  | $ | 67.4 |
International | 274.8 |  |  | 210.4 |  |  | 146.0 |
| $ | (134.4 | ) |  | $ | (33.8 | ) |  | $ | 213.4 |
The Company’s current and deferred income tax provision (benefits) are as follows:
| Year Ended March 31,
| 2017 |  | 2016 |  | 2015
Current provision (benefit): | (Amounts in millions)
Federal | $ | 7.8 |  |  | $ | 6.2 |  |  | $ | 12.0 |
States | 2.2 |  |  | 2.5 |  |  | 0.6 |
International | 4.5 |  |  | (0.2 | ) |  | 5.1 |
Total current provision | $ | 14.5 |  |  | $ | 8.5 |  |  | $ | 17.7 |
Deferred provision (benefit): |  |  |  |  |
Federal | $ | (143.3 | ) |  | $ | (77.4 | ) |  | $ | 12.3 |
States | (9.9 | ) |  | (7.6 | ) |  | 3.4 |
International | (10.2 | ) |  | — |  |  | (1.8 | )
Total deferred provision (benefit) | (163.4 | ) |  | (85.0 | ) |  | 13.9 |
Total provision (benefit) for income taxes | $ | (148.9 | ) |  | $ | (76.5 | ) |  | $ | 31.6 |
The differences between income taxes expected at U.S. statutory income tax rates and the income tax provision are as set forth below:
| Year Ended March 31,
| 2017 |  | 2016 |  | 2015
| (Amounts in millions)
Income taxes computed at Federal statutory rate of 35% | $ | (47.1 | ) |  | $ | (11.8 | ) |  | $ | 74.7 |
Foreign affiliate dividends | (84.2 | ) |  | (59.4 | ) |  | (44.7 | )
Foreign and provincial operations subject to different income tax rates | (14.6 | ) |  | (7.1 | ) |  | (1.8 | )
State income tax | (6.0 | ) |  | (3.8 | ) |  | 1.4 |
Transaction costs | 7.3 |  |  | — |  |  | — |
Permanent differences | (0.5 | ) |  | 6.5 |  |  | 3.0 |
Other | (2.3 | ) |  | (0.9 | ) |  | (1.0 | )
Increase (decrease) in valuation allowance | (1.5 | ) |  | — |  |  | — |
| $ | (148.9 | ) |  | $ | (76.5 | ) |  | $ | 31.6 |
For the years ended March 31, 2015, 2016, and 2017, the tax provision includes a favorable permanent book-tax difference in our Canadian jurisdiction for certain foreign affiliate dividends. Canadian tax law permits such dividends to be received without being subject to tax. Although the Company is incorporated under Canadian law, the majority of its global operations are currently subject to tax in the U.S. As a result, the Company believes it is more appropriate to use the U.S. Federal statutory rate in its reconciliation of the statutory rate to its reported income tax rate. The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:
| March 31, 2017 |  | March 31, 2016
| (Amounts in millions)
Deferred tax assets: |  |  |
Net operating losses | $ | 224.3 |  |  | $ | 77.8 |
Foreign tax credits | 57.5 |  |  | 44.7 |
Investment in film and television obligations | 91.6 |  |  | 93.7 |
Accounts payable | 112.1 |  |  | 42.2 |
Other assets | 60.3 |  |  | 28.2 |
Reserves | 41.2 |  |  | 17.1 |
Subordinated notes | 8.2 |  |  | — |
Total deferred tax assets | 595.2 |  |  | 303.7 |
Valuation allowance | (5.9 | ) |  | (10.1 | )
Deferred tax assets, net of valuation allowance | 589.3 |  |  | 293.6 |
Deferred tax liabilities: |  |  |
Intangible assets | (780.8 | ) |  | (0.1 | )
Fixed assets | (28.6 | ) |  | (0.6 | )
Accounts receivable | (185.7 | ) |  | (141.0 | )
Subordinated notes | — |  |  | (1.7 | )
Other | (14.4 | ) |  | (15.8 | )
Total deferred tax liabilities | $ | (1,009.5 | ) |  | $ | (159.2 | )
Net deferred tax assets (liabilities) | $ | (420.2 | ) |  | $ | 134.4 |
The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related to state credits and net operating losses of a U.S. branch that is not a member of the U.S. consolidated group, as sufficient uncertainty exists regarding the future realization of these assets. At March 31, 2017, the Company had U.S. net operating loss carryforwards of approximately $709.9 million available to reduce future federal income taxes which expire beginning in 2029 through 2037. At March 31, 2017, the Company had state net operating loss carryforwards of approximately $395.7 million available to reduce future state income taxes which expire in varying amounts beginning 2021. At March 31, 2017, the Company had Canadian loss carryforwards of $3.5 million which will expire beginning in 2028. At March 31, 2017, the Company had U.K. loss carryforwards of $0.7 million which do not expire. In addition, at March 31, 2017, we had U.S. credit carryforwards related to foreign taxes paid of approximately $57.5 million to offset future federal income taxes that will expire beginning in 2021. Approximately $153.2 million of net operating loss carryforwards consist of excess tax benefits. An excess tax benefit occurs when the actual tax deduction in connection with a share-based award exceeds the compensation cost expensed for the award. The Company recognizes excess tax benefits associated with the exercise of stock options and vesting of restricted share units directly to shareholders’ equity only when realized. Accordingly, deferred tax assets are not recognized for net operating loss carryforwards resulting from excess tax benefits. At March 31, 2017, deferred tax assets do not include the tax effect of $153.2 million of loss carryovers from these excess tax benefits. The following table summarizes the changes to the gross unrecognized tax benefits for the years ended March 31, 2017, 2016, and 2015:
| Amounts in millions
Gross unrecognized tax benefits at March 31, 2014 | $ | 2.2 |
Increases related to prior year tax positions | 2.3 |
Decreases related to prior year tax positions | — |
Settlements | — |
Lapse in statute of limitations | — |
Gross unrecognized tax benefits at March 31, 2015 | 4.5 |
Increases related to prior year tax positions | — |
Decreases related to prior year tax positions | — |
Settlements | — |
Lapse in statute of limitations | — |
Gross unrecognized tax benefits at March 31, 2016 | 4.5 |
Increases related to prior year tax positions | 14.2 |
Decreases related to prior year tax positions | (4.5 | )
Settlements | — |
Lapse in statute of limitations | — |
Gross unrecognized tax benefits at March 31, 2017 | $ | 14.2 |
For the years ended March 31, 2017, 2016, and 2015, interest and penalties were not significant. The Company records interest and penalties on unrecognized tax benefits as part of income tax provision. The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. With a few exceptions, the Company is subject to income tax examination by U.S. and state tax authorities for the fiscal years ended March 31, 2008 and forward. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses (“NOLs”) were generated and carried forward, and make adjustments up to the amount of the NOLs. The Company is not currently subject to examination by the U.K. tax authorities. Currently, audits are occurring in federal and various state and local tax jurisdictions. Subsequent to March 31, 2017, the Company was notified by Canada Revenue Agency that it intends to examine the 2014 and 2015 income tax returns. The total amount of unrecognized tax benefits as of March 31, 2017 that, if realized, would affect the Company's tax benefit (provision) are $0.6 million. The Company believes that it is reasonably possible that a decrease of up to $14.2 million in unrecognized tax benefits related to federal and state exposures may occur within the coming year. A majority of these decreases relate to Starz pre-acquisition uncertainties which we expect to settle with the applicable taxing authorities either through the appeals process or voluntary disclosure agreements.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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