XML 31 R16.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Sources of Pre-Tax Income and Related Tax Provision by Region
Geographic sources of income before income taxes consists of the following:
(in millions)202320222021
Continuing operations:   
U.S. domestic$924.1 $1,099.5 $465.2 
Foreign6.3 24.2 24.7 
Income from continuing operations before income taxes930.4 1,123.7 489.9 
Discontinued operations:   
U.S. domestic(121.9)(9.3)(165.1)
Foreign143.6 75.9 167.6 
Income from discontinued operations before income taxes21.7 66.6 2.5 
Total income before income taxes$952.1 $1,190.3 $492.4 
The provision for income taxes from continuing operations consists of the following:
(in millions)202320222021
Current provision:   
Federal and state$235.2 $280.1 $99.8 
Foreign4.5 8.4 7.4 
Total current provision239.7 288.5 107.2 
Deferred (benefit) provision:   
Federal and state(20.2)(19.1)0.4 
Foreign(8.0)(3.7)(3.3)
Total deferred (benefit) provision(28.2)(22.8)(2.9)
Total provision for income taxes$211.5 $265.7 $104.3 
Rate Reconciliation
A reconciliation of the tax provision from continuing operations computed at the U.S. federal statutory rate to the actual tax provision follows:
(in millions, except percentages)202320222021
Taxes at U.S. statutory rate$195.4 $236.0 $102.9 
State and local taxes, net of federal income tax benefit31.4 39.5 16.1 
Equity compensation windfall(3.3)(4.6)(10.8)
Change in unrecognized tax benefit(2.3)(1.9)(7.5)
Other, net(9.7)(3.3)3.6 
Provision for income taxes$211.5 $265.7 $104.3 
Effective income tax rate on continuing operations22.7 %23.6 %21.3 %
Cash payments for income taxes, net of refunds, were $247.7 million, $295.8 million and $132.8 million, in 2023, 2022 and 2021, respectively.
Deferred Tax Assets (Liabilities), net
(in millions)December 31,
2023		December 31,
2022
Employee benefits$33.6 $25.2 
Deferred revenue32.8 27.6 
Capitalized research and development costs20.6 16.6 
U.S. state tax attributes13.7 13.2 
Lease liabilities13.3 13.7 
Non-U.S. tax attributes10.6 3.8 
Warranty reserves5.7 7.2 
U.S. federal tax attributes5.2 15.2 
Other, net14.9 15.4 
Gross deferred assets150.4 137.9 
Valuation allowances(15.1)(23.7)
Deferred tax assets after valuation allowances135.3 114.2 
Intangibles(314.1)(354.3)
Property, plant and equipment(46.8)(47.4)
Right of use assets(12.2)(12.3)
Undistributed foreign earnings(5.8)(5.7)
Gross deferred liabilities(378.9)(419.7)
Net deferred tax liabilities$(243.6)$(305.5)
Deferred tax assets and liabilities are classified as long-term. Foreign deferred tax assets and liabilities are grouped separately from U.S. domestic assets and liabilities and are analyzed on a jurisdictional basis.
Deferred tax assets and liabilities included in the Consolidated Balance Sheet follows:
(in millions)December 31,
2023		December 31,
2022
Other long-term assets$0.7 $1.5 
Other long-term liabilities(244.3)(307.0)
Net deferred tax liabilities$(243.6)$(305.5)
Valuation Allowances
As of December 31, 2023, the Company had foreign tax credit carryforwards for U.S. federal tax purposes of $5.2 million, which begin to expire in 2025. The Company believes it is likely the credits will expire unused and therefore has established a full valuation allowance. As of December 31, 2023, the Company also had a deferred tax asset for state tax attributes of approximately $13.7 million, which begin to expire in 2025, comprised of net operating loss ("NOL"), credits, and capital loss carryforwards. The Company believes that it is likely that the capital losses and certain of the state NOLs will expire unused and therefore has established a valuation allowance of approximately $9.2 million against the deferred tax assets associated with these attributes. The Company also has deferred tax assets related to carryforwards in foreign jurisdictions of approximately $10.6 million, comprised of NOL and interest expense carryforwards, which begin to expire in 2025. The Company believes that it is likely that certain foreign NOL carryforwards will expire unused and therefore has established a valuation allowance of approximately $0.7 million.
Undistributed Foreign Earnings
The Company has determined that an amount attributable to certain foreign cash balances and other certain assets is not permanently reinvested for withholding tax purposes, which results in an accrual of $5.8 million. It is not practicable to calculate deferred tax balances on other basis differences.
Unrecognized Tax Benefits
Unrecognized tax benefits reflect the difference between the tax benefits of positions taken or expected to be taken on income tax returns and the tax benefits that meet the criteria for current recognition in the financial statements. The Company periodically assesses its unrecognized tax benefits. 
A summary of the movement in gross unrecognized tax benefits (before estimated interest and penalties) follows:
(in millions)202320222021
Balance as of January 1$6.4 $7.3 $13.1 
Additions based on tax positions related to current year3.3 0.9 0.7 
Reductions due to statute of limitations(2.7)(1.8)(6.5)
Adjustments for tax positions of prior years— 0.2 — 
Reductions due to settlements(0.2)(0.2)— 
Adjustments due to foreign exchange rates0.5 — — 
Balance as of December 31$7.3 $6.4 $7.3 
If the unrecognized tax benefits as of December 31, 2023, were to be recognized, approximately $6.7 million would impact the Company’s effective tax rate. The amount impacting the Company’s effective rate is calculated by adding accrued interest and penalties to the gross unrecognized tax benefit excluding positions related to discontinued operations and subtracting the tax benefit associated with state taxes and interest.
The Company classifies and reports interest and penalties associated with unrecognized tax benefits as a component of the income tax provision on the Consolidated Statements of Income and as a long-term liability on the Consolidated Balance Sheets. The total amount of such interest and penalties accrued, but excluded from the table above, at the years ending December 31, 2023, 2022 and 2021 were $1.2 million, $2.3 million and $2.4 million, respectively.
The Company is subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. The Company participates in the IRS compliance assurance program and is currently up to date.
Generally, state income tax returns are subject to examination for a period of three years to five years after filing. Substantially all material state tax matters have been concluded for tax years through 2017. Various state income tax returns for subsequent years are in the process of examination. At this stage the outcome is uncertain; however,
the Company believes that contingencies have been adequately provided for. Statutes of limitation vary among the foreign jurisdictions in which the Company operates. Substantially all foreign tax matters have been concluded for tax years through 2012. The Company believes that foreign tax contingencies associated with income tax examinations underway or open tax years have been provided for adequately.
Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, the Company believes that within the next 12 months it is reasonably possible that previously unrecognized tax benefits could decrease by approximately $0.5 million to $1.5 million. These previously unrecognized tax benefits relate to a variety of tax issues including tax matters relating to prior acquisitions and various state matters.
Tax Legislation
The Organization for Economic Co-operation and Development (“OECD”) has introduced a framework to implement a global minimum corporate tax of 15%, referred to as Pillar Two. Many aspects of Pillar Two will be effective beginning in calendar year 2024 and other aspects will be effective beginning in calendar year 2025. While it is uncertain whether the U.S. will adopt Pillar Two, certain countries in which the Company operates have adopted legislation and other countries are in the process of introducing legislation to implement Pillar Two. While we do not expect Pillar Two to have a material impact on our effective tax rate, our analysis is ongoing as the OECD releases additional guidance and countries implement additional legislation.
The Inflation Reduction Act (“IRA”) was signed into law on August 16, 2022. Among other provisions, the IRA includes a 15% corporate minimum tax applied to large corporations, knows as the “CAMT”. The CAMT does not impact the Consolidated Financial Statements for 2023. The Company will continue to evaluate the impact of CAMT on future years.