Income taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Income before income taxes from continuing operations consisted of the following:



	Year ended December 31,
	2017			2016		2015
Domestic	$	1,725,822		$	1,278,754	$	730,249
International	(326,036		)	344,351		(41,862		)
	$	1,399,786		$	1,623,105	$	688,387

Income tax expense (benefit) for continuing operations consisted of the following:



	Year ended December 31,
	2017			2016			2015
Current:
Federal	$	330,191		$	322,940		$	124,503
State	47,228			44,525			20,442
International	3,422			1,928			856
Total current income tax	380,841			369,393			145,801
Deferred:
Federal	(98,760		)	88,412			71,016
State	37,347			(28,530		)	(9,737		)
International	4,431			2,486			430
Total deferred income tax	(56,982		)	62,368			61,709
	$	323,859		$	431,761		$	207,510

Income taxes are allocated between continuing and discontinued operations as follows:



	Year ended December 31,
	2017			2016		2015
Continuing operations	$	323,859		$	431,761	$	207,510
Discontinued operations	(364,856		)	24,052		88,216
	$	(40,997	)	$	455,813	$	295,726

The reconciliation between the Company’s effective tax rate from continuing operations and the U.S. federal income tax rate is as follows:



	Year ended December 31,
	2017		2016		2015
Federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.7		2.6		1.7
Gain on APAC JV ownership changes	(0.2	)	(9.9	)	—
APAC investment impairment	6.4		—		—
Impact of 2017 Tax Act	(20.5	)	—		—
Other	2.0		1.8		2.3
Impact of noncontrolling interests primarily attributable to non-tax paying entities	(3.3	)	(2.9	)	(8.9	)
Effective tax rate	23.1	%	26.6	%	30.1	%

On December 22, 2017, the President signed into law the tax legislation known as the Tax Cuts and Jobs Act (the 2017 Tax Act). The 2017 Tax Act includes a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction in the U.S. corporate income tax rate from 35.0% to 21.0% effective January 1, 2018. The 2017 Tax Act also provides for full expensing of qualified assets placed into service after September 27, 2017, as well as prospective changes beginning in 2018, imposes a one-time transition tax on certain foreign subsidiaries, and changes how foreign earnings are subject to U.S. tax prospectively.

The Company recognized the income tax effects of the 2017 Tax Act in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the 2017 Tax Act was signed into law. As such, the Company’s financial results reflect the income tax effects of the 2017 Tax Act for which accounting under ASC Topic 740 is complete and provisional amounts, primarily as it relates to the full expensing provisions of the 2017 Tax Act, for those specific income tax effects for which the accounting is incomplete but a reasonable estimate could be determined.

The Company has completed the accounting for income taxes with respect to the mandatory one-time tax on accumulated earnings of its foreign subsidiaries and has determined that there is no mandatory repatriation and therefore no income tax liability associated with this one-time tax.

The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company’s deferred tax assets and liabilities were remeasured to reflect a reasonable estimate of the reduction in the U.S. corporate income tax rate from 35.0% to 21.0%, resulting in a provisional $251,510 net tax benefit.

While the Company has substantially completed its provisional analysis of the income tax effects of the 2017 Tax Act and recorded a reasonable estimate of such effects, the net one-time benefit related to the 2017 Tax Act may differ, possibly materially, due to, among other things, further refinement of the underlying calculations, changes in interpretations and assumptions that the Company has made, additional guidance that may be issued by the U.S. Government, and actions and related accounting policy decisions the Company may take as a result of the 2017 Tax Act. The Company will complete its analysis over a one-year measurement period ending December 22, 2018, and any adjustments during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense in the reporting period in which such adjustments are determined.

Deferred tax assets and liabilities arising from temporary differences for continuing operations were as follows:



	December 31,
	2017			2016
Receivables	$	19,705		$	25,197
Accrued liabilities	96,537			224,712
Net operating loss carryforwards	108,429			128,813
Other	37,794			73,525
Deferred tax assets	262,465			452,247
Valuation allowance	(61,282		)	(56,016		)
Net deferred tax assets	201,183			396,231
Intangible assets	(501,763		)	(676,781		)
Property and equipment	(100,376		)	(141,919		)
Investments in partnerships	(61,529		)	(95,936		)
Other	(23,762		)	(12,464		)
Deferred tax liabilities	(687,430		)	(927,100		)
Net deferred tax liabilities	$	(486,247	)	$	(530,869	)

At December 31, 2017, the Company had federal net operating loss carryforwards of approximately $137,852 that expire through 2036, although a substantial amount expire by 2028. The Company also had state net operating loss carryforwards of $445,554 that expire through 2036 and international net operating loss carryforwards of $138,717, some of which have an indefinite life. The utilization of a portion of these losses may be limited in future years based on the profitability of certain entities. The net increase of $5,266 in the valuation allowance is primarily due to newly created net operating loss carryforwards in state and foreign jurisdictions that the Company does not anticipate being able to utilize.

The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued would now be subject to U.S. tax. Irrespective of the fact that the Company will not experience any one-time tax under this provision of the 2017 Tax Act, it intends to continue to indefinitely reinvest these earnings, as well as capital invested and future earnings from its foreign subsidiaries to fund its international operations. In addition, the Company expects future U.S. cash generation will be sufficient to meet future U.S. cash needs. Determination of the amount of any applicable deferred taxes on the earnings is not practical since the computation would depend on a number of factors that cannot be known unless a decision is made to repatriate the earnings.

Unrecognized tax benefits

A reconciliation of the beginning and ending liability for unrecognized tax benefits that do not meet the more-likely-than-not threshold is as follows:



	Year ended December 31,
	2017			2016
Beginning balance	$	24,066		$	39,011
Additions for tax positions related to current year	7,606			9,714
Additions for tax positions related to prior years	804			—
Reductions related to lapse of applicable statute	(1,380		)	(1,277		)
Impact of 2017 Tax Act	3,731			—
Reductions related to settlements with taxing authorities	(2,051		)	(23,382		)
Ending balance	$	32,776		$	24,066

As of December 31, 2017, the Company’s total liability for unrecognized tax benefits relating to tax positions that do not meet the more-likely-than-not threshold is $32,776, all of which would impact the Company’s effective tax rate if recognized. This balance represents an increase of $8,710 from the December 31, 2016 balance of $24,066, primarily due to additions for tax positions related to the current year.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. At December 31, 2017 and 2016, the Company had approximately $4,195 and $2,595, respectively, accrued for interest and penalties related to unrecognized tax benefits, net of federal tax benefit.

The Company and its subsidiaries file U.S. federal and state income tax returns and various foreign income tax returns. The Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2013 and 2008, respectively.