Note 12 - Income Taxes

The components of income (loss) before income taxes for the periods indicated were as follows (in millions):



	For the Years Ended December 31,
	2017		2016		2015
Domestic	$	334.9	$	202.4	$	(26.5	)
Foreign	36.9		23.4		(41.2		)
Total	$	371.8	$	225.8	$	(67.7	)

The provision for income taxes for the periods indicated were as follows (in millions):



	For the Years Ended December 31,
	2017			2016			2015
Current:
Federal	$	(6.0	)	$	85.8		$	(4.5	)
Foreign	11.5			3.0			9.4
State and local	(0.8		)	6.7			3.3
	$	4.7		$	95.5		$	8.2
Deferred:
Federal	$	18.2		$	6.1		$	25.7
Foreign	(7.5		)	(6.8		)	(19.9		)
State and local	7.6			(3.0		)	(2.0		)
	$	18.3		$	(3.7	)	$	3.8
Provision for income taxes	$	22.9		$	91.8		$	12.0

The tax effects of significant items comprising the Company’s net deferred tax liability as of the dates indicated were as follows (in millions):



	December 31,
	2017			2016
Deferred tax assets:
Accrued insurance	$	24.6		$	31.1
Operating loss carryforwards and tax credits	54.9			34.9
Unrealized gains and losses	11.4			26.3
Compensation and benefits	7.5			24.1
Bad debt	1.2			4.7
Other	7.9			12.4
Valuation allowance	(40.5		)	(21.4		)
Total deferred tax assets	$	67.0		$	112.1
Deferred tax liabilities:
Property and equipment	$	104.1		$	126.6
Goodwill	56.7			72.8
Other intangible assets	28.7			32.9
Gain on remeasurement of equity investee	6.9			10.9
Long-term contracts	11.3			20.2
Investments in unconsolidated entities	52.8			0.0
Other	11.0			15.3
Total deferred tax liabilities	$	271.5		$	278.7
Net deferred tax liabilities	$	(204.5	)	$	(166.6	)

As of December 31, 2017, the Company had $204.5 million of long-term deferred tax liabilities. As of December 31, 2016, current deferred tax assets, net, totaled $11.8 million and long-term deferred tax liabilities, net, totaled $178.4 million. See Note 1 - Business, Basis of Presentation and Significant Accounting Policies regarding the January 1, 2017 adoption of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.

In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. Management considers the projected future taxable income and prudent and feasible tax planning strategies in making this assessment. The Company’s valuation allowances as of December 31, 2017 and 2016 are related primarily to foreign net operating losses and deferred tax assets. The Company’s state net operating loss carryforwards, which may be carried forward between 5 and 20 years depending on the jurisdiction, totaled approximately $12.3 million and $9.0 million as of December 31, 2017 and 2016, respectively. The Company’s foreign net operating loss carryforwards, which are primarily related to the Company’s Canadian operations, totaled approximately $38.4 million and $22.7 million as of December 31, 2017 and 2016, respectively. The Canadian net operating loss carryforwards, which make up the majority of the foreign net operating loss carryforwards, begin to expire in 2033. The Company’s federal net operating loss carryforwards, which begin to expire in 2022, totaled approximately $0.2 million and $0.5 million as of December 31, 2017 and 2016, respectively.

In December 2017, the 2017 Tax Act was enacted, which includes broad tax reform that is applicable to the Company. Under the provisions of the 2017 Tax Act, the U.S. corporate tax rate decreased from 35% to 21% effective January 1, 2018. As a result, the Company’s U.S. deferred income tax balances were required to be remeasured in 2017. The Company completed an initial remeasurement of its deferred tax assets and liabilities as of December 31, 2017 as a result of this new tax law, which resulted in a non-cash tax benefit of $120.1 million for the year ended December 31, 2017. This initial remeasurement calculation contains estimates of the impact of the 2017 Tax Act as permitted under SAB 118. These amounts are considered provisional and may be affected by future guidance. The Company may identify additional remeasurement adjustments to its recorded deferred tax assets and liabilities. Any such revisions will be treated in accordance with the measurement period guidance outlined in SAB 118.

As of December 31, 2017, the Company has not made a provision for U.S. income taxes on unremitted foreign earnings because such earnings, which generally become subject to U.S. taxation upon remittance of dividends and certain other circumstances, are considered to be insignificant and are intended to be indefinitely reinvested outside the United States. The Company expects that domestic cash resources will be sufficient to fund its domestic operations and cash commitments in the future.

A reconciliation of the U.S. statutory federal income tax rate related to pretax income to the effective tax rate for the periods indicated is as follows:



	For the Years Ended December 31,
	2017		2016		2015
U.S. statutory federal rate applied to pretax income (loss)	35.0	%	35.0	%	35.0	%
State and local income taxes, net of federal benefit	2.0		2.6		(1.0	)
Foreign tax rate differential	0.3		(0.1	)	(14.4	)
Non-deductible expenses	2.2		4.4		(13.5	)
Goodwill and intangible assets	(0.0	)	(0.7	)	(17.7	)
Change in tax rate	(32.3	)	(1.9	)	(3.6	)
Domestic production activities deduction	(0.2	)	(2.9	)	(1.0	)
Other	(0.7	)	(0.1	)	(1.4	)
Tax credits	(2.8	)	(0.0	)	(0.0	)
Valuation allowance for deferred tax assets	2.7		4.3		0.0
Effective income tax rate	6.2	%	40.6	%	(17.6	)%

An entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. In the ordinary course of business, there is inherent uncertainty in quantifying income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based on management's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recognized the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the Company's financial statements.

A reconciliation of the beginning and ending amount of uncertain tax positions including interest and penalties is as follows (in millions):



	For the Years Ended December 31,
	2017		2016		2015
Beginning balance	$	—	$	—	$	—
Additions based on tax positions related to the current year	3.2		—		—
Additions for tax positions of prior years	4.9		—		—
Ending balance	$	8.1	$	—	$	—

The Company classifies interest and penalties on uncertain tax positions as a component of income tax expense in the consolidated statements of operations, which amounts were de minimis in 2017. If the Company were to recognize its gross unrecognized tax benefits as of December 31, 2017, approximately $8.1 million, including interest and penalties, would affect the Company’s effective tax rate.

The IRS has completed examinations of the Company’s federal income tax returns through the calendar year 2013 and has recently begun an examination of the Company’s 2015 federal income tax return. Certain state taxing authorities are examining various years. The final outcome of these examinations is not yet determinable. With few exceptions, as of December 31, 2017, the Company is no longer subject to state examinations by taxing authorities for years before 2014.