

	Years Ended December 31,
	2019			2018			2017
Current provision (benefit):
Federal	$	6.2		$	(126.1	)	$	594.3
States	14.4			9.0			13.9
Foreign	48.5			38.9			45.4
Total current provision (benefit)	69.1			(78.2		)	653.6
Deferred provision (benefit):
Federal	0.8			36.6			(128.7		)
States	2.8			2.2			(17.7		)
Foreign	(3.3		)	5.2			(1.6		)
Total deferred provision (benefit)	0.3			44.0			(148.0		)
Total provision (benefit) for income taxes	$	69.4		$	(34.2	)	$	505.6

The provision (benefit) for income taxes differs from the amount computed by applying the federal statutory rate of 21% for 2019, 21% for 2018, and 35% for 2017, respectively, to pretax income as follows (in millions):



	Years Ended December 31,
	2019			2018			2017
Expected provision at statutory rate	$	87.0		$	111.9		$	284.1
State taxes, net of federal benefit	9.4			7.4			12.0
Foreign income at different tax rates	1.8			(12.8		)	(46.4		)
R&D tax credits	(18.8		)	(22.1		)	(15.1		)
Share-based compensation	3.8			4.7			—
Non-deductible compensation	3.3			1.9			1.6
Temporary differences not currently benefited	12.9			—			—
Recognition of previously unrecognized tax benefits	(25.4		)	—			—
Lapses in federal statutes of limitations	(7.5		)	(67.6		)	—
Tax accounting method changes	—			(65.4		)	—
Release of valuation allowance	—			—			(1.7		)
Domestic production activities	—			—			(12.4		)
Impact of the U.S. Tax Cuts and Jobs Act	—			2.8			289.5
Other	2.9			5.0			(6.0		)
Total (benefit) provision for income taxes	$	69.4		$	(34.2	)	$	505.6

In 2019, the Company recorded a $25.4 million benefit, including interest, related to the recognition of previously unrecognized tax benefits pursuant to the resolution of a tax audit and a $7.5 million benefit, including interest, for a lapse in statute of limitations.

In 2018, the Company recorded a $67.6 million benefit, including interest, related to a lapse in statute of limitations relative to tax years 2010 through 2014, a $33.2 million benefit as a result of filing a change in accounting method for the tax recognition of

The Tax Cuts and Jobs Act ("Tax Act") was enacted on December 22, 2017. The Tax Act introduced significant changes to U.S. income tax law. Effective January 1, 2018, the Tax Act reduced the U.S. federal corporate income tax rate from 35% to 21%, created a minimum tax on foreign earnings and imposed a one-time transition tax on accumulated foreign earnings through December 31, 2017. In 2017, the Company recorded provisional amounts for the effects of the Tax Act of $289.5 million primarily related to net taxes on accumulated foreign earnings and the re-measurement of the Company’s deferred tax assets at the revised U.S. statutory rate. In the fourth quarter of 2018, the Company completed its analysis to determine the effect of the Tax Act and recorded immaterial adjustments as of December 31, 2018.

Deferred income taxes reflect the net tax effects of tax carry-forward items and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's long-term deferred tax assets and deferred tax liabilities are as follows (in millions):



	As of December 31,
	2019			2018
Deferred tax assets:
Net operating loss carry-forwards	$	27.7		$	12.9
Research and other credit carry-forwards	236.7			220.0
Deferred revenue	40.0			37.7
Share-based compensation	24.3			26.1
Cost sharing adjustment	—			12.2
Reserves and accruals not currently deductible	55.8			62.7
Operating lease liabilities	48.3			—
Other	12.0			13.2
Total deferred tax assets	444.8			384.8
Valuation allowance	(249.4		)	(233.7		)
Deferred tax assets, net of valuation allowance	195.4			151.1
Deferred tax liabilities:
Property and equipment basis differences	(39.2		)	(40.6		)
Purchased intangibles	(27.8		)	(13.7		)
Unremitted foreign earnings	(23.7		)	(26.4		)
Deferred compensation and other	(8.7		)	(8.9		)
Operating lease assets	(41.1		)	—
Total deferred tax liabilities	(140.5		)	(89.6		)
Net deferred tax assets	$	54.9		$	61.5

As of December 31, 2019 and 2018, the Company had a valuation allowance on its U.S. domestic deferred tax assets of approximately $249.4 million and $233.7 million, respectively. The balance at December 31, 2019 consisted of approximately $221.6 million, $20.2 million and $3.1 million against the Company's California, Massachusetts and Canadian deferred tax assets, respectively, which the Company believes are not more likely than not to be utilized in future years. The remaining deferred tax assets for which the Company recorded a valuation allowance of approximately $4.5 million related to losses that are capital in nature and may carry forward to offset future capital gains only. The valuation allowance increased in 2019 and 2018 by $15.7 million and $19.2 million, respectively, primarily related to the change in California, Massachusetts and Canadian R&D tax credits.

As of December 31, 2019, the Company had federal and California net operating loss carry-forwards of approximately $101.2 million and $134.0 million, respectively. The California net operating loss carry-forwards of $134.0 million are expected to expire unused. The Company also had federal and California tax credit carry-forwards of approximately $4.7 million and $262.5 million, respectively. Unused net operating loss carry-forwards will expire at various dates beginning in the year 2020. The California tax credit carry-forwards will carry forward indefinitely.

The Company provides deferred tax liabilities for all tax consequences associated with the undistributed earnings that are expected to be repatriated to subsidiaries' parent unless the subsidiaries' earnings are considered indefinitely reinvested. The Company has

made no provision for deferred taxes on approximately $35.8 million of cumulative undistributed earnings of certain foreign subsidiaries through December 31, 2019. These earnings are considered indefinitely invested in operations of the subsidiaries, as the Company intends to utilize these amounts to fund future expansion of its operations. If these earnings were distributed to the parent, the Company would be subject to additional taxes of approximately $7.1 million.

As of December 31, 2019, 2018, and 2017, the total amount of gross unrecognized tax benefits was $151.3 million, $178.1 million, and $264.5 million, respectively. As of December 31, 2019, approximately $150.9 million of the $151.3 million gross unrecognized tax benefits, if recognized, would affect the effective tax rate.



	Years Ended December 31,
	2019			2018			2017
Balance at beginning of year	$	178.1		$	264.5		$	223.1
Tax positions related to current year:
Additions	5.9			4.3			64.6
Tax positions related to prior years:
Additions	0.8			12.7			1.8
Reductions	(3.3		)	(33.8		)	(16.6		)
Settlements	(22.5		)	(2.6		)	(4.0		)
Lapses in statutes of limitations	(7.7		)	(67.0		)	(4.4		)
Balance at end of year	$	151.3		$	178.1		$	264.5

As of December 31, 2019, 2018, and 2017, the Company had accrued interest and penalties related to unrecognized tax benefits of $29.9 million, $33.8 million, and $40.7 million, respectively, to other long-term liabilities in the Consolidated Balance Sheets. Due to the changes in the level of gross unrecognized tax benefits, the Company recognized a benefit for net interest and penalties of $2.8 million, $5.2 million and an expense of $8.5 million in its Consolidated Statements of Operations during the years ended December 31, 2019, 2018, and 2017, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

In December 2019, the Internal Revenue Service and the Company concluded the appeals process for the 2007 through 2009 tax years. As a result, the Company released $30.9 million of previously unrecognized tax benefits, including $8.4 million in interest and penalties.

The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. There is a greater than remote likelihood that the balance of the gross unrecognized tax benefits will decrease by a range of approximately $9.6 million to $24.6 million within the next twelve months due to the completion of tax review cycles in various tax jurisdictions and lapses of applicable statutes of limitation.

The Company conducts business globally and, as a result, Juniper Networks or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as the Netherlands, U.K., France, Germany, Japan, China, Australia, India, and the U.S. With few exceptions, the Company is no longer subject to U.S. federal, state and local, and non-U.S. income tax examinations for years before 2009.

The Company is currently under examination by the India tax authorities for the 2009 through 2015 tax years. The examinations by the India tax authorities are ongoing. The Company regularly assesses the likelihood of an adverse outcome resulting from such examinations. As of December 31, 2019, the Company believes the resolution of the audits is unlikely to have a material effect on its consolidated financial condition or results of operations.

The Company is pursuing all available administrative remedies relative to these ongoing matters. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to these proposed adjustments and the ultimate resolution of these matters is unlikely to have a material effect on its consolidated financial condition or results of operations; however, there is still a possibility that an adverse outcome of these matters could have a material effect on its consolidated financial condition and results of operations.