Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Before Income Tax Provision (Benefit)

The Company’s income before income tax provision was subject to taxes in the following jurisdictions for the following periods (in thousands):

	Years Ended December 31,
	2021		2020		2019
United States	$	295,322	$	68,916	$	55,352
Foreign	55,320		(196,394)		40,417
	$	350,642	$	(127,478)	$	95,769

Expense (Benefit) for Income Taxes

The expense (benefit) for income taxes is comprised of (in thousands):

	Years Ended December 31,
	2021		2020		2019
Current tax provision:
Federal	$	2,916	$	1,665	$	1,022
State	2,267		1,467		1,403
Foreign	14,643		5,385		9,933
	19,826		8,517		12,358
Deferred tax expense (benefit):
Federal	11,032		8,579		10,185
State	7,146		5,166		335
Foreign	(9,350)		(22,806)		(6,338)
	8,828		(9,061)		4,182
Income tax provision (benefit)	$	28,654	$	(544)	$	16,540

Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows (in thousands):

	December 31,
	2021		2020
Deferred tax assets:
Operating loss carryforwards	$	149,895	$	26,919
Tax credit carryforwards	64,250		49,525
ASC Topic 842 lease liability	396,378		52,785
Deemed landlord financing	115,060		—
Other	72,768		53,163
Total deferred tax assets	798,351		182,392
Valuation allowance for deferred tax assets	(120,499)		(21,032)
Deferred tax assets, net of valuation allowance	677,852		161,360
Deferred tax liabilities:
Basis difference related to fixed assets	(105,532)		—
Basis difference related to intangible assets with an indefinite life	(331,130)		(100,062)
ASC Topic 842 ROU assets	(375,697)		(49,910)
Other	(7,920)		(10,281)
Total deferred tax liabilities	(820,279)		(160,253)
Net deferred tax assets (liabilities) are shown on the accompanying consolidated balance sheets as follows:
Non-current deferred tax assets	21,164		59,735
Non-current deferred tax liabilities	(163,591)		(58,628)
Net deferred tax (liabilities)/ assets	$	(142,427)	$	1,107

Credit Carryforward Expiry

As of December 31, 2021, the Company had federal and state income tax credit carryforwards of $56,134,000 and $25,786,000, respectively, which will expire if unused at various dates beginning on December 31, 2027. Such credit carryforwards expire as follows (in thousands):

U.S. foreign tax credit	$	3,165	2027 - 2031
U.S. research tax credit	26,568		2031 - 2041
U.S. business tax credits	26,401		2031 - 2041
State investment tax credits	2,028		Do not expire
State research tax credits - definite lived	1,563		2030 - 2034
State research tax credits - indefinite lived	$	22,195	Do not expire

Net Operating Losses Expiry

The Company has recorded a deferred tax asset, before consideration of reflecting the benefit of NOL and interest expense carryforwards. The NOLs and interest expense carryforwards expire as follows (in thousands):

U.S. loss carryforwards - definite lived	$	181,549	2028 - 2037
U.S. interest expense carryforwards - indefinite lived	12,910		Do not expire
U.S. loss carryforwards - indefinite lived	213,743		Do not expire
State loss carryforwards	$	269,930	2022 - 2041

Reconciliation of Effective Tax Rate on Income or Loss and Statutory Tax Rate

A reconciliation of the effective tax rate on income or loss and the statutory tax rate is as follows:

	Years Ended December 31,
	2021		2020		2019
Statutory U.S. tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of U.S. tax benefit	2.1	%	(4.1)	%	1.6	%
Foreign income taxed at other than U.S. statutory rate	(3.3)	%	7.0	%	(5.0)	%
Federal tax credits	(2)	%	2.8	%	(3.5)	%
Goodwill impairment	—	%	(24.5)	%	—	%
Revaluation of Callaway stock attributable to Topgolf merger	(15.1)	%	—	%	—	%
Other non-deductible expenses	0.7	%	(1.7)	%	1.2	%
Non-deductible compensation	1.4	%	(0.7)	%	1.5	%
Stock compensation excess tax benefits	(1.6)	%	1.4	%	(1.5)	%
Foreign derived intangible income deduction	(2.1)	%	1.1	%	(3.2)	%
Impact of uncertain tax positions	(2.2)	%	(1.6)	%	3.7	%
Change in deferred tax valuation allowance	7.8	%	(0.7)	%	0.2	%
Other	1.5	%	0.4	%	1.3	%
Effective tax rate	8.2	%	0.4	%	17.3	%

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2021		2020		2019
Balance at January 1	$	28,302	$	25,993	$	11,832
Additions based on tax positions related to the current year	1,727		3,119		3,224
Additions for tax positions of prior years	526		474		593
Reductions for tax positions of prior years	(936)		(186)		(174)
Settlement of tax audits	(2,665)		—		(7)
Current year acquisitions	6,740		—		11,006
Reductions due to lapsed statute of limitations	(7,046)		(1,098)		(481)
Balance at December 31	$	26,648	$	28,302	$	25,993

Major Jurisdictions No Longer Subject to Income Tax Examinations by Tax Authorities

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is generally no longer subject to income tax examinations by tax authorities in its major jurisdictions as follows:

Major Tax Jurisdiction	Years No Longer Subject to Audit
U.S. Federal	2010 and prior
California (U.S.)	2008 and prior
Germany	2013 and prior
Japan	2015 and prior
South Korea	2015 and prior
United Kingdom	2017 and prior