Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 13. INCOME TAXES

Components of Earnings Before Income Taxes

The following table summarizes the components of earnings before income taxes for the years ended December 31 (in thousands):

	2020		2019		2018
Domestic	$	1,030,609	$	981,188	$	1,078,678
International		716,479		795,175		807,612
Earnings before income taxes	$	1,747,088	$	1,776,363	$	1,886,290

Summary of Current and Deferred Income Taxes

The following table summarizes the components of the provision for income taxes for the years ended December 31 (in thousands):

	2020			2019			2018
Current income tax expense:
U.S. federal	$	48,440		$	3,232		$	1,727
International		65,720			41,855			50,731
State and local		15,554			17,209			9,424
Total current income tax expense		129,714			62,296			61,882
Deferred income tax expense (benefit):
U.S. federal		(2,464	)		(208	)		(317	)
International		3,208			12,429			1,765
Total deferred income tax expense		744			12,221			1,448
Total income tax expense	$	130,458		$	74,517		$	63,330

Current Income Taxes

We recognize current income tax expense for the federal and state income taxes incurred by our TRSs and taxes incurred in certain states and foreign jurisdictions. Current income tax expense fluctuates from period to period based primarily on the timing of our taxable income. Taxable income incurred over the last three years was principally due to the following: (i) the contribution of real estate properties to our unconsolidated co-investment ventures and sales to third parties; (ii) recurring and transactional fees earned; and (iii) taxable earnings from unconsolidated co-investment ventures.

During the year ended December 31, 2020, we recognized current tax expense of $5.4 million related to the settlement of an uncertain tax position. For the years ended December 31, 2019 and 2018, we did not recognize any expense for uncertain tax positions.

During the years ended December 31, 2020, 2019 and 2018, cash paid for income taxes, net of refunds, was $100.7 million, $62.1 million and $60.3 million, respectively.

Deferred Income Taxes

The deferred income tax expense recognized in 2020, 2019 and 2018 was primarily due to changes in temporary differences and utilization of NOLs.

The following table summarizes the deferred income tax assets and liabilities at December 31 (in thousands):

	2020			2019
Gross deferred income tax assets:
NOL carryforwards	$	297,900		$	287,516
Basis difference – real estate properties		59,259			42,472
Basis difference – equity investments		-			445
Section 163(j) interest limitation		1,486			480
Capital loss carryforward		16,845			1
Other – temporary differences		4,122			2,754
Total gross deferred income tax assets		379,612			333,668
Valuation allowance		(326,706	)		(299,092	)
Gross deferred income tax assets, net of valuation allowance		52,906			34,576
Gross deferred income tax liabilities:
Basis difference – real estate properties		79,230			78,113
Basis difference – equity investments		31,995			12,622
Other – temporary differences		999			1,898
Total gross deferred income tax liabilities		112,224			92,633
Net deferred income tax liabilities	$	59,318		$	58,057

At December 31, 2020, we had NOL carryforwards as follows (in thousands):

	U.S.			Europe			Mexico			Japan			Other
Gross NOL carryforward	$	94,574		$	698,936		$	217,532		$	113,743		$	36,023
Tax-effected NOL carryforward		24,213			177,386			67,843			19,688			8,770
Valuation allowance		(18,919	)		(168,630	)		(67,843	)		(18,037	)		(8,532	)
Net deferred tax asset – NOL carryforward	$	5,294		$	8,756		$	-		$	1,651		$	238
Expiration periods	2021 – indefinite			2021 – indefinite			2021 – 2031			2021 – 2030			2021 – indefinite

The deferred tax asset valuation allowance at December 31, 2020, was adequate to reduce the total deferred tax asset to an amount that we estimate will more likely than not be realized.

Liability for Uncertain Tax Positions

During the years ended December 31, 2020, 2019 and 2018, we believe that we had complied with the REIT requirements of the IRC. The statute of limitations for our tax returns is generally three years. As such, our tax returns that remain subject to examination would be primarily from 2017 and thereafter.

During the year ended December 31, 2020, we recognized a $21.3 million liability for uncertain tax positions related to acquisition activities. In 2020, we settled the $3.0 million liability for the uncertain tax position at December 31, 2019.