Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

19. Income Taxes

An income tax benefit of $71.3 for Holdings and $67.6 for CUSA was recorded during the nine months ended September 30, 2024 resulting in an effective tax rate of approximately (37.6)% for Holdings and (33.7)% for CUSA, respectively.

During the three months ended September 30, 2024, the Company recorded a discrete deferred tax benefit of $70.5 for Holdings and $66.7 for CUSA related to the release of valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets. During the nine months ended September 30, 2024 the Company recorded a discrete deferred tax benefit of $116.3 for Holdings and $112.4 for CUSA related to the release of the aforementioned valuation allowances in the U.S. as well as valuation allowances in certain foreign jurisdictions. The release of these valuation allowances was the result of the availability of positive evidence related to sustained taxable income in the relevant jurisdictions to support the future realizability of deferred tax assets. This discrete benefit favorably impacted the effective tax rates of Holdings and CUSA for the three and nine months ended September 30, 2024, causing the income tax benefit to vary significantly from the tax expense derived by applying the statutory tax rate to the pre-tax income of Holdings and CUSA.

The remaining valuation allowance as of September 30, 2024 was $134.3 for Holdings and $87.4 for CUSA, and primarily relates to foreign tax credits, federal and state interest expense carryforwards, and certain state net operating losses.

The Company is currently under IRS audit for tax years 2019 and 2020. On October 21, 2024, the IRS issued a Revenue Agent Report (“RAR”) proposing an adjustment of approximately $96.8 before interest and penalties related to positions reported in each year. The Company firmly disagrees with the conclusions presented by the IRS and believes the positions reported on its tax returns that have not been reserved for are more likely than not to prevail on technical merits. The Company intends to vigorously defend its reported positions through the applicable IRS administrative and judicial procedures, as appropriate. The Company regularly assesses the likelihood of adverse outcomes resulting from examinations such as this to determine the adequacy of the Company’s tax reserves. Currently, the Company believes it is adequately reserved for these matters. The ultimate outcome of disputes of this nature is uncertain and there can be no assurance that the dispute with the IRS will be resolved favorably.