
	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Current:
Federal	$	—	$	(55)	$	(702)
Foreign	61,834		40,239		50,970
State	5,523		6,828		4,117
Total current	67,357		47,012		54,385
Deferred:
Federal	5,314		2,246		(56,442)
Foreign	(6,345)		(8,697)		(15,841)
State	566		204		744
Total deferred	(465)		(6,247)		(71,539)
Income tax expense (benefit)	$	66,892	$	40,765	$	(17,154)

The domestic income (loss) before income taxes was $36.1 million, $43.5 million and $(132.6) million for 2019, 2018 and 2017, respectively. Foreign income before income taxes was $149.0 million, $87.6 million and $123.2 million for 2019, 2018 and 2017, respectively.


	December 31,
	2019		2018
	(in thousands)
Deferred tax liabilities:
Leases	$	192,870	$	—
Intangible assets	161,843		118,275
Prepaid expenses	5,876		2,534

Other	19,186		5,865
Total deferred tax liabilities	379,775		126,674
Deferred tax assets:
Intangible assets	40,926		25,981
Accrued expenses	60,479		40,989
Net operating loss carryforwards	488,081		388,459
Foreign tax and other credit carryforwards	47,215		38,919
Equity compensation	22,503		24,211
Leases	211,206		—
Other	12,751		15,703
Total gross deferred tax assets	883,161		534,262
Valuation allowance	667,242		530,642
Total deferred tax assets	215,919		3,620
Net deferred tax liabilities	$	(163,856)	$	(123,054)

Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction. As of December 31, 2019, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses. As a result of the valuation allowances, no tax benefits have been recognized for losses incurred in those tax jurisdictions in 2019, 2018 and 2017. The leases deferred tax liabilities and leases deferred tax assets were recorded in 2019 pursuant to the new lease accounting standard. See Note 1—The Company and Summary of Significant Accounting Policies for a discussion of the new lease standard.

During 2019 and 2018, we recorded net deferred tax liabilities of $43.3 million and $4.0 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations. This is the primary reason for the increase in intangible assets deferred tax liability

As of December 31, 2019, we have United States federal, state and foreign deferred tax assets related to net operating loss carryforwards of $99.9 million, $61.6 million and $326.6 million, respectively. The increase in net operating loss carryforwards is primarily attributed to loss carryforwards as reported in our most recently filed tax returns. The majority of the increase in net operating loss carryforwards are in jurisdictions for which we maintain a full valuation allowance against net deferred tax assets. Based on current statutory carryforward periods, the operating loss carryforwards will expire on various dates beginning in 2025. Our federal net operating loss may be subject to statutory limitations on the amount that can be used in any given year.


	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Income tax expense (benefit) at United States statutory rates (21%, 21% and 35%, respectively)	$	38,872	$	27,532	$	(3,283)
State income taxes, net of federal tax benefits	3,137		4,860		1,544
Differences between foreign and United States statutory rates	6,384		2,650		(10,887)
United States tax reform rate change	—		—		(55,685)
Non-United States income inclusions and exclusions	(3,222)		(3,425)		3,826
United States income inclusions and exclusions	(2,582)		(13,790)		11,347
Nondeductible items	10,118		26,376		11,380
Tax contingencies	(1,340)		389		1,955
Tax expense from acquired goodwill	6,107		4,353		4,489

Change in valuation allowance	8,536		(8,845)		18,067
Other, net	882		665		93
	$	66,892	$	40,765	$	(17,154)

Amounts included in differences between foreign and United States statutory rates are impacted by changes in the mix of international earnings subject to various tax rates which can differ greatly in their proximity to the United States statutory rate. The differences between statutory rates is also impacted by our Luxembourg affiliates and tax rulings which include the application of a reduced Luxembourg effective rate to the net income before tax resulting from our financing activities in Luxembourg.

Amounts included in United States income inclusions and exclusions for 2019 and 2018 include the favorable impact of tax deductions for vesting of restricted stock awards and exercises of stock options partially offset by unfavorable inclusions for global intangible low-taxed income (“GILTI”) under the provisions associated with the TCJA.

Nondeductible items in 2019 and 2018 include the impact of increased nondeductible expenses pursuant to the provisions of the TCJA including nondeductible executive compensation. Nondeductible items in 2018 and 2017 include our goodwill impairment for Artist Services (non-managment) which was not deductible for income tax purposes.

The change in valuation allowance for each period presented resulted primarily from changes in the income within jurisdictions with full valuation allowances, including the United States.


	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Balance at January 1	$	34,071	$	30,630	$	15,117
Additions:
Increase for current year positions	2,215		1,531		807
Increase for prior year positions	1,898		2,995		15,498

Interest and penalties for prior years	458		106		2,745
Reductions:
Decrease for prior year positions	(3,272)		—		—
Expiration of applicable statute of limitations	—		(730)		(1,233)
Settlements for prior year positions	(13,852)		(9)		(2,033)
Foreign exchange	205		(452)		(271)

Balance at December 31	$	21,723	$	34,071	$	30,630

In February 2019, the Company reached a settlement agreement with the Canadian taxing authority regarding existing uncertain tax positions. The gross liability for unrecognized tax benefits primarily decreased in 2019 due to this settlement.

If we were to prevail on all uncertain tax positions, the net effect would be a decrease to our income tax provision of approximately $1.8 million. The remaining $19.9 million is offset by deferred tax assets that represent tax benefits that would be received in the event that we did not prevail on all uncertain tax positions. As of December 31, 2019, it is not expected that the total amounts of unrecognized tax benefits will increase or decrease materially within the next year.

We regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations. Liabilities for income taxes are established for future income tax assessments when it is probable there will be future assessments and the amount can be reasonably estimated. Once established, liabilities for uncertain tax positions are adjusted only when there is more information available or when an event occurs necessitating a change to the liabilities. As of December 31, 2019, we believe that the resolution of income tax matters for open years will not have a material effect on our consolidated financial statements although the resolution of income tax matters could impact our effective tax rate for a particular future period.