XML 33 R20.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The components of the provision for income taxes for the years ended December 31 follow:
202120202019
Current:
Federal
$234.9 $71.7 $46.1 
State
67.3 43.6 40.5 
Deferred:
Federal
(34.1)65.4 151.8 
State
18.6 12.6 18.9 
State deferred benefit - change in valuation allowance— (17.2)(4.6)
Uncertain tax positions and interest, and other(3.9)(3.0)(30.7)
Provision for income taxes$282.8 $173.1 $222.0 
The reconciliations of the statutory federal income tax rate to our effective tax rate for the years ended December 31 follow:
202120202019
Federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit4.5 4.5 4.2 
Change in valuation allowance— (1.5)(0.4)
Non-deductible expenses1.0 1.7 1.7 
Uncertain tax position taxes and interest0.1 0.1 (0.3)
Investment tax credits(8.0)(8.8)(6.5)
Other, net(0.6)(1.8)(2.6)
Effective income tax rate18.0 %15.2 %17.1 %
During 2021, we acquired non-controlling interests in limited liability companies established to own solar energy assets that qualified for investment tax credits under Section 48 of the Internal Revenue Code. We account for these investments using the equity method of accounting and recognize our share of income or loss and other reductions in the value of our investment in loss from unconsolidated equity method investments within our consolidated statements of income. For further discussion regarding our equity method accounting, see Note 3, Business Acquisitions, Investments and Restructuring Charges. Our 2021 tax provision reflects a benefit of approximately $126 million due to the tax credits related to these investments.
Our 2020 tax provision was reduced by $11.6 million from excess tax benefits related to stock compensation, approximately $100 million related to the tax credits from our non-controlling interest in limited liability companies established to own solar energy assets, $17.2 million for adjustments to our valuation allowance due to the realizability of certain state loss carryforwards, and $8.2 million due to the realization of additional federal and state benefits as well as adjustments to deferred taxes due to the completion of our 2019 tax returns.
Our 2019 tax provision was reduced by $12.3 million from excess tax benefits related to stock compensation, approximately $84 million related to the tax credits from our non-controlling interests in limited liability companies established to own solar energy assets, and approximately $13 million due to the realization of tax credits and lower state rates due to changes in estimates following the completion of our 2018 tax returns.
We made income tax payments (net of refunds) of approximately $300 million, $124 million and $31 million for 2021, 2020, and 2019, respectively. Income taxes paid in 2021, 2020, and 2019 reflect benefits from tax credits from our continuing investments in solar energy. For 2020 and 2019, cash taxes paid reflect benefits from 100% bonus depreciation on qualified assets.
The components of the net deferred income tax asset and liability as of December 31 follow:
20212020
Deferred tax liabilities relating to:
Differences between book and tax basis of property and equipment
$(949.2)$(1,010.7)
Difference between book and tax basis of intangible assets
(503.7)(464.6)
Operating right-of-use lease assets
(66.5)(60.9)
Basis difference due to redemption of partnership interests
(82.2)(85.3)
Total liabilities
$(1,601.6)$(1,621.5)
Deferred tax assets relating to:
Environmental reserves
$217.6 $224.6 
Accruals not currently deductible
82.4 84.5 
Net operating loss carryforwards
105.1 111.8 
Difference between book and tax basis of other assets
22.5 21.7 
Operating right-of-use lease liabilities
66.4 61.1 
Other
14.1 13.3 
Total assets
508.1 517.0 
Valuation allowance
(43.7)(43.8)
Net deferred tax asset
464.4 473.2 
Net deferred tax liabilities$(1,137.2)$(1,148.3)
Changes in the deferred tax valuation allowance for the years ended December 31 follow:
202120202019
Valuation allowance, beginning of year$43.8 $67.6 $73.5 
Additions charged to provision for income taxes0.4 2.2 0.1 
Deferred tax assets realized or written-off0.1 (28.3)(6.0)
Other, net(0.6)2.3 — 
Valuation allowance, end of year$43.7 $43.8 $67.6 
We have deferred tax assets related to state net operating loss carryforwards. We provide a partial valuation allowance due to uncertainty surrounding the future utilization of these carryforwards in the taxing jurisdictions where the loss carryforwards exist. When determining the need for a valuation allowance, we consider all positive and negative evidence, including recent financial results, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies. The weight given to the positive and negative evidence is commensurate with the extent such evidence can be objectively verified. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized.
Substantially all of our valuation allowance is associated with state loss carryforwards. The realization of our deferred tax asset for state loss carryforwards ultimately depends upon the existence of sufficient taxable income in the appropriate state taxing
jurisdictions in future periods. We continue to regularly monitor both positive and negative evidence in determining the ongoing need for a valuation allowance.
We have deferred tax assets related to state net operating loss carryforwards with an estimated tax effect of approximately $87 million available as of December 31, 2021. These state net operating loss carryforwards expire at various times between 2022 and 2041. We believe that it is more likely than not that the benefit from some of our state net operating loss carryforwards will not be realized due to limitations on these loss carryforwards in certain states. In recognition of this risk, as of December 31, 2021, we have provided a valuation allowance of approximately $43 million.
We are subject to income tax in the United States, as well as income tax in multiple state jurisdictions. Our compliance with income tax rules and regulations is periodically audited by tax authorities. These authorities may challenge the positions taken in our tax filings. Thus, to provide for certain potential tax exposures, we maintain liabilities for uncertain tax positions for our estimate of the final outcome of the examinations. Our federal statute of limitations is closed for all years prior to 2015. We are currently under examination by the Internal Revenue Service (IRS) for tax years 2015 through 2018. In addition, we are currently under state examination or administrative review in various jurisdictions for tax years 2012 to 2020.
The following table summarizes the activity in our gross unrecognized tax benefits for the years ended December 31:
202120202019
Balance at beginning of year$101.1 $100.7 $104.9 
Additions for tax positions of prior years0.5 0.4 0.9 
Reductions for tax positions of prior years(0.1)— — 
Reductions for tax positions resulting from lapse of statute of limitations— — (0.2)
Settlements— — (4.9)
Balance at end of year$101.5 $101.1 $100.7 
During 2019 we resolved tax matters in various states which reduced our gross unrecognized tax benefits by $5.1 million.
Included in our gross unrecognized tax benefits as of December 31, 2021, 2020, and 2019 are $93.6 million, $93.3 million and $93.0 million, respectively, of unrecognized tax benefits (net of the federal benefit) that, if recognized, would affect our effective income tax rate in future periods. However, we are unable to estimate the resolution of these matters over the next 12 months.
We recognize interest and penalties as incurred within the provision for income taxes in our consolidated statements of income. Related to the unrecognized tax benefits previously noted, we recorded interest expense of $0.8 million during 2021 and, in total as of December 31, 2021, have recognized a liability for penalties of $0.3 million and interest of $13.7 million.
During 2020, we recorded interest expense of approximately $0.8 million and, in total as of December 31, 2020, had recognized a liability for penalties of $0.3 million and interest of $12.6 million. During 2019, we accrued interest of $4.0 million and, in total as of December 31, 2019, had recognized a liability for penalties of $0.3 million and interest of $11.6 million.