Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

The following table is a summary of the components of income (loss) before income taxes for the years ended December 31:

(Amounts in millions)	2020		2019		2018
U.S.	$	(0.3)	$	(76.5)	$	(49.6)
Foreign	6.4		12.2		38.7
Income (loss) before income taxes	$	6.1	$	(64.3)	$	(10.9)

Foreign income consists of income from the Company's international subsidiaries. Most of the Company's wholly-owned subsidiaries recognize revenue based solely on services agreements with the primary U.S. operating subsidiary. The following table is a summary of the income tax expense (benefit) for the years ended December 31:

(Amounts in millions)	2020		2019		2018
Current:
Federal	$	(1.4)	$	(0.2)	$	5.9
State	2.1		1.5		1.7
Foreign	4.2		8.2		(4.0)
Current income tax expense	4.9		9.5		3.6
Deferred:
Federal	7.1		(10.4)		6.5
State	1.9		(1.9)		1.0
Foreign	0.1		(1.2)		2.0
Deferred income tax expense (benefit)	9.1		(13.5)		9.5
Income tax expense (benefit)	$	14.0	$	(4.0)	$	13.1

As of December 31, 2020, the Company had a tax payable of $23.7 million recorded within "Accounts payable and other liabilities" and a tax receivable of $7.4 million recorded within "Other assets" on the Consolidated Balance Sheets. As of

December 31, 2019, the Company had a tax payable of $22.4 million recorded within "Accounts payable and other liabilities" and a tax receivable of $12.8 million recorded within "Other assets" on the Consolidated Balance Sheets.

The following table is a reconciliation of the expected federal income tax expense (benefit) at statutory rates to the actual income tax expense (benefit) for the years ended in December 31: 

(Amounts in millions)	2020		2019		2018
Income tax expense (benefit) at statutory federal income tax rate	$	1.3	$	(13.5)	$	(2.3)
Tax effect of:
State income tax, net of federal income tax effect	(0.4)		(1.3)		0.2
Valuation allowances	12.0		2.2		0.7
International taxes	1.5		3.4		(0.8)
Deferred prosecution agreement permanent difference	—		—		8.4
Other net permanent differences	1.8		1.7		0.9
U.S. general business credits	(3.6)		(2.4)		—
Change in unrecognized tax benefits	2.4		1.2		(0.4)
Stock-based compensation	0.7		3.8		(0.6)
Impact from the TCJA	—		1.1		(1.3)
BEAT	(0.6)		—		5.6
U.S. taxation of foreign earnings	(1.1)		0.5		7.0
Reorganization	—		—		(3.6)
Other	—		(0.7)		(0.7)
Income tax expense (benefit)	$	14.0	$	(4.0)	$	13.1

In 2020, the Company recognized an income tax expense of $14.0 million on a pre-tax income of $6.1 million. Our income tax rate was higher than the statutory rate primarily due to an increase in valuation allowance, an increase in unrecognized tax benefits, non-deductible expenses, and international taxes, all of which were partially offset by U.S. general business credits and a change in U.S. tax law. As a result of the issuance of the final Section 951A and Section 954 regulations by the U.S. Treasury Department and the Internal Revenue Service (the "IRS") on July 20, 2020, the Company recorded a discrete tax benefit of $1.7 million in the third quarter of 2020 related to both the direct and indirect effects of the GILTI high-tax exclusions being applied retroactively to tax years 2018 and 2019.

In 2019, the Company recognized an income tax benefit of $4.0 million on a pre-tax loss of $64.3 million . Our income tax rate was lower than the statutory rate primarily due to the reversal of tax benefits on share-based compensation, an increase in valuation allowance, non-deductible expenses and foreign taxes, all of which were partially offset by U.S. general business credits. In 2019, as a result of the issuance of the final Section 965 regulations by the U.S. Treasury Department and the Internal Revenue Service ("IRS") on January 15, 2019, the Company recognized tax expense of $1.1 million to revise its one-time transition tax liability, which resulted in no tax due as a result of offsetting foreign tax credits.

In 2018, the Company recognized an income tax expense of $13.1 million on a pre-tax loss of $10.9 million, primarily due to the tax impact of the nondeductibility of the accrual related to the five-year deferred prosecution agreement (the "DPA") as further discussed in Note 15 — Commitments and Contingencies and the foreign subsidiary income inclusion and base erosion and anti-abuse tax ("BEAT") enacted under the TCJA, partially offset by the one-time $3.6 million deferred tax benefit from a reorganization of our corporate structure.

The following table is a summary of the Company's deferred tax assets and liabilities as of December 31: 

(Amounts in millions)	2020		2019
Deferred tax assets:
Basis difference in revalued investments	$	54.0	$	55.3
Tax loss carryovers	24.4		25.7
Tax credit carryovers	15.6		12.9
Postretirement benefits and other employee benefits	8.4		7.9
Bad debt and other reserves	2.2		1.1
Lease liabilities	12.0		11.5
Depreciation & amortization	11.6		12.1
Interest expense carryovers	1.3		2.4
Other	7.5		7.9
Valuation allowances	(81.2)		(71.2)
Total deferred tax assets	55.8		65.6
Deferred tax liability:
Depreciation and amortization and other	(66.0)		(67.8)
Lease right-of-use assets	(11.0)		(10.6)
Total deferred tax liability	(77.0)		(78.4)
Net deferred tax liability	$	(21.2)	$	(12.8)

The Company offsets deferred tax asset positions with deferred tax liability positions based on right to offset in each respective tax jurisdiction. As of December 31, 2020, net deferred tax asset positions of $4.6 million were included within "Other assets" and net deferred tax liability positions of $25.8 million were included within "Accounts payable and other liabilities" in the Consolidated Balance Sheets. As of December 31, 2019, net deferred tax asset positions of $5.2 million were reflected within "Other assets" and net deferred tax liability positions of $18.0 million were included within "Accounts payable and other liabilities" in the Consolidated Balance Sheets. The valuation allowances as of December 31, 2020 and 2019, primarily relate to basis differences in revalued investments, capital loss carryovers, U.S. tax credit carryovers, and certain state and foreign tax loss carryovers. The net $10.0 million increase in our valuation allowances is based on our more likely than not assessment that $12.0 million of our U.S. tax credits and state and foreign tax loss carryovers will expire prior to utilization, offset by a $2.0 million decrease for expired capital losses previously reduced by valuation allowances.

The following table is a summary of the amounts and expiration dates of tax loss carry-forwards (not tax effected) and credit carry-forwards as of December 31, 2020: 

(Amounts in millions)	Expiration Date	Amount
U.S. capital loss carry-forwards	2021 - 2025	$	34.5
U.S. net operating loss carry-forwards	2025 - Indefinite	$	37.8
U.S. tax credit carry-forwards	2024- 2040	$	15.6

Unrecognized tax benefits are recorded within "Accounts payable and other liabilities" in the Consolidated Balance Sheets. The following table is a reconciliation of unrecognized tax benefits for the years ended December 31:

(Amounts in millions)	2020		2019		2018
Beginning balance	$	18.2	$	17.9	$	28.7
Additions based on tax positions related to prior years	0.9		0.9		0.7
Additions based on tax positions related to current year	0.6		—		0.8
Settlements with cash or attributes	—		(0.1)		—
Reductions for tax positions of prior years and other	—		(0.5)		(12.3)
Ending balance	$	19.7	$	18.2	$	17.9

As of December 31, 2020, 2019 and 2018, the liability for unrecognized tax benefits was $19.7 million , $18.2 million and $17.9 million , respectively, exclusive of interest and penalties. For 2020, 2019 and 2018, the net amount of unrecognized tax benefits that if recognized would impact the effective tax rate was $19.7 million , $18.2 million and $17.9 million, respectively. The Company accrues interest and penalties for unrecognized tax benefits through "Income tax (benefit) expense" in the Consolidated Statements of Operations. For 2020, 2019 and 2018, the Company's accrual for interest and penalties increased by

$1.1 million, increased by $1.0 million and decreased by $1.6 million, respectively. As of December 31, 2020 and 2019, the Company had a liability of $9.4 million and $8.3 million, respectively, accrued for interest and penalties within "Accounts payable and other liabilities." As a result of the Company's litigation related to its securities losses discussed in more detail in Note 15 — Commitments and Contingencies, it is possible that there could be a significant decrease to the total amount of unrecognized tax benefits over the next 12 months. However, as of December 31, 2020, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits over the next 12 months.