Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

Note 11 Income Taxes

Income (loss) from continuing operations before income taxes consisted of the following:

	Year Ended December 31,
United States and Other Jurisdictions	2021		2020		2019
	(In thousands)
United States	$	(153,243)	$	(182,706)	$	5,979
Other jurisdictions		(334,846)		(522,861)		(594,901)
Income (loss) from continuing operations before income taxes	$	(488,089)	$	(705,567)	$	(588,922)

Income tax expense (benefit) from continuing operations consisted of the following:

	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Current:
U.S. federal	$	(1,905)	$	(39,268)	$	1,210
Outside the U.S.		60,318		33,858		54,097
State		7,914		(2,020)		318
	$	66,327	$	(7,430)	$	55,625
Deferred:
U.S. federal	$	(4,669)	$	67,909	$	58,157
Outside the U.S.		(3,608)		(4,992)		(25,428)
State		(2,429)		1,799		3,222
	$	(10,706)	$	64,716	$	35,951
Income tax expense (benefit)	$	55,621	$	57,286	$	91,576

A reconciliation of our statutory tax rate to our worldwide effective tax rate consists of the following:

	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Income tax provision at statutory (Bermuda rate of 0%)	$	—	$	—	$	—
Taxes (benefit) on U.S. and other international earnings (losses) at greater than the Bermuda rate		23,395		62,751		54,060
Increase (decrease) in valuation allowance		8,276		(9,759)		32,869
Tax reserves and interest		26,266		861		1,107
State income taxes (benefit)		(2,316)		3,433		3,540
Income tax expense (benefit)	$	55,621	$	57,286	$	91,576
Effective tax rate		(11.4)%		(8.1)%		(15.5)%

The relatively small decrease in tax expense was primarily attributable to higher tax expense on a gain related to our debt exchange recognized in 2020, partially offset by an increase in tax expense attributable to a recorded liability for uncertain tax positions of $26.3 million in 2021, as well as changes in the operating income and the geographic mix of our pre-tax earnings (losses) in the jurisdictions in which we operate.

The components of our net deferred taxes consisted of the following:

	December 31,
	2021		2020
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	3,676,333	$	3,618,227
Equity compensation		822		1,594
Deferred revenue		775		3,878
Tax credit and other attribute carryforwards		84,624		84,502
Insurance loss reserves		2,909		2,086
Depreciation and amortization for tax in excess of book expense		118,151		44,837
Other		131,223		110,003
Subtotal		4,014,837		3,865,127
Valuation allowance		(3,754,207)		(3,602,144)
Deferred tax assets:	$	260,630	$	262,983
Deferred tax liabilities:
Depreciation and amortization for tax in excess of book expense	$	—	$	—
Other		4,772		17,388
Deferred tax liability	$	4,772	$	17,388
Net deferred tax assets (liabilities)	$	255,858	$	245,595
Balance Sheet Summary:
Net noncurrent deferred tax asset	$	258,631	$	247,171
Net noncurrent deferred tax liability		(2,773)		(1,576)
Net deferred tax asset (liability)	$	255,858	$	245,595

As of December 31, 2021, we had federal, state, and foreign net operating loss (“NOL”) carryforwards of approximately $728.6 million, $931.1 million and $14.2 billion, respectively. Of those amounts, $7.6 billion will expire between 2022 and 2042 if not utilized. We provide a valuation allowance against NOL carryforwards in various tax jurisdictions based on our consideration of existing temporary differences and expected future earning levels in those jurisdictions. A valuation allowance of approximately $3.5 billion as of December 31, 2021 has been recognized related to certain NOL carryforwards as we believe it is more likely than not that the benefit of these NOL carryforwards will not be realized.

The following is a reconciliation of our uncertain tax positions:

	2021		2020		2019
	(In thousands)
Balance as of January 1	$	26,704	$	25,770	$	25,711
Additions for tax positions of prior years		19,760		1,887		1,003
Reductions for tax positions for prior years		(476)		(953)		(860)
Settlements		—		—		(84)
Balance as of December 31	$	45,988	$	26,704	$	25,770

If the unrecognized tax benefits of $46.0 million are realized, this would favorably impact the worldwide effective tax rate. As of December 31, 2021, 2020 and 2019, we had approximately $14.4 million, $7.6 million and $7.7 million, respectively, of interest and penalties related to uncertain tax positions. During 2021, 2020 and 2019, we accrued and recognized estimated interest and penalties related to uncertain tax positions of approximately $6.9 million, ($0.6) million and $0.8 million, respectively. We include potential interest and penalties related to uncertain tax positions within our global operations in the income tax expense (benefit) line item in our consolidated statements of income (loss).

It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may increase or decrease in the next twelve months primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.

We conduct business globally and, as a result, we file numerous income tax returns in the U.S. and non-U.S. jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including major jurisdictions such as Canada, Colombia, Mexico, Saudi Arabia and the United States. We are no longer subject to U.S. Federal income tax examinations for years before 2018 and non-U.S. income tax examinations for years before 2007.