Income Taxes

6 Months Ended

Jun. 30, 2022

Income Taxes

Income Taxes

Note 6—Income Taxes

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Provision for income taxes	$	(144.5)		$	(78.1)		$	(278.7)		$	(182.2)
Effective tax rate		23.3	%		17.5	%		23.5	%		20.6	%

For the three months ended June 30, 2022 and 2021, stock option exercise activity had the impact of decreasing our Provision for income taxes by $7.5 and $19.3, respectively, and decreasing our effective tax rate by 120 basis points and 430 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income. For the six months ended June 30, 2022 and 2021, stock option exercise activity had the impact of decreasing our Provision for income taxes by $11.3 and $22.0, respectively, and decreasing our effective tax rate by 100 basis points and 250 basis points, respectively. For the three and six months ended June 30, 2021, acquisition-related expenses had the effect of increasing our effective tax rate by approximately 60 basis points and 30 basis points, respectively, and a discrete tax benefit of $14.9 related to the settlement of uncertain tax positions in certain non-U.S. jurisdictions had the effect of decreasing our effective tax rate by 330 basis points and 170 basis points, respectively.

The United States federal government enacted the Tax Cuts and Jobs Act (“Tax Act”) in December 2017. As a result, in 2017, the Company recorded a transition tax (“Transition Tax”) related to the deemed repatriation of the accumulated unremitted earnings and profits of the Company’s foreign subsidiaries. The Company paid its fifth annual installment of the Transition Tax, net of applicable tax credits and deductions, in the second quarter of 2022, and will pay the balance of the Transition Tax, net of applicable tax credits and deductions, over the remainder of the eight-year period ending 2025, as permitted under the Tax Act. The current and long-term portions of the Transition Tax are recorded in Accrued income taxes and Other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021.

The Company operates in the U.S. and numerous foreign taxable jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2017 and after. The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable. As of June 30, 2022, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $182.9. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including the progress of tax audits and the closing of statutes of limitations. Based on information currently available, management anticipates that over the next twelve-month period, audit activity could be completed and statutes of limitations may close relating to existing unrecognized tax benefits of approximately $14.4.