Income Taxes

12 Months Ended

Dec. 31, 2019

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,
	2019			2018			2017
Domestic	$	1,307,299		$	1,083,578		$	1,725,822
International	(111,860		)	(35,100		)	(326,036		)
	$	1,195,439		$	1,048,478		$	1,399,786

Income tax expense for continuing operations consisted of the following:



	Year ended December 31,
	2019			2018		2017
Current:
Federal	$	208,339		$	140,064	$	330,191
State	58,026			32,990		47,228
International	15,545			7,557		3,422
Total current income tax	281,910			180,611		380,841
Deferred:
Federal	44,263			52,034		(98,760		)
State	(25,836		)	21,096		37,347
International	(20,709		)	4,659		4,431
Total deferred income tax	(2,282		)	77,789		(56,982		)
	$	279,628		$	258,400	$	323,859

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



	Year ended December 31,
	2019		2018		2017
Continuing operations	$	279,628	$	258,400	$	323,859
Discontinued operations	40,689		99,768		(364,856		)
	$	320,317	$	358,168	$	(40,997	)

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,
	2019		2018		2017
Federal income tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal benefit	2.3		4.1		3.7
Change in International valuation allowance	1.3		0.9		0.4
Gain on APAC JV ownership changes	—		—		(0.2	)
Political advocacy costs	0.2		2.3		—
APAC investment impairment	—		—		6.4
Impact of 2017 Tax Act	—		(0.1	)	(20.5	)
Unrecognized tax benefits	2.4		0.2		0.1
Other	1.1		0.8		1.5
Impact of noncontrolling interests primarily attributable to non-tax paying entities	(4.9	)	(4.6	)	(3.3	)
Effective tax rate	23.4	%	24.6	%	23.1	%

On December 22, 2017, the President signed into law tax legislation known as the Tax Cuts and Jobs Act (2017 Tax Act). Consistent with Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 118, the Company completed its analysis of certain aspects of the 2017 Tax Act in 2017 and recorded provisional amounts for those items for which the accounting was not complete as of December 31, 2017. The Company completed its analysis of these provisional items in 2018 and recorded immaterial adjustments to the original estimates.

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



	December 31,
	2019			2018
Receivables	$	19,095		$	19,327
Accrued liabilities	64,458			106,506
Operating lease liabilities	580,110			—
Net operating loss carryforwards	139,690			117,511
Other	55,108			36,712
Deferred tax assets	858,461			280,056
Valuation allowance	(91,925		)	(70,474		)
Net deferred tax assets	766,536			209,582
Intangible assets	(563,914		)	(555,822		)
Property and equipment	(162,628		)	(118,008		)
Operating lease assets	(527,056		)	—
Investments in partnerships	(64,960		)	(67,354		)
Other	(25,521		)	(30,934		)
Deferred tax liabilities	(1,344,079		)	(772,118		)
Net deferred tax liabilities	$	(577,543	)	$	(562,536	)

At December 31, 2019, the Company had federal net operating loss carryforwards of approximately $111,322 that expire through 2036, although a substantial amount expire by 2028. The Company also had state net operating loss carryforwards of $434,030, some of which have an indefinite life, although a substantial amount expire by 2039 and international net operating loss carryforwards of $224,197, some of which will begin to expire in 2021 though the majority have an indefinite life. We have a state capital loss carryover of $188,823 that expires in 2024. The utilization of a portion of these losses may be limited in future years based on the profitability of certain entities. A valuation allowance is recorded to account for the unrealizable balances in the table above. The net increase of $21,451 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 Company's foreign earnings continue to be indefinitely reinvested as of December 31, 2019. As a result of the passage of the 2017 Tax Act, the Company does not expect such earnings to be taxable if remitted.

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,
	2019			2018
Beginning balance	$	40,382		$	32,776
Additions for tax positions related to current year	3,378			6,111
Additions for tax positions related to prior years	24,722			4,134
Reductions related to lapse of applicable statute	(268		)	(338		)
Reductions related to settlements with taxing authorities	—			(2,301		)
Ending balance	$	68,214		$	40,382

As of December 31, 2019, the Company’s total liability for unrecognized tax benefits relating to tax positions that do not meet the more-likely-than-not threshold is $68,214, of which $63,968 would impact the Company’s effective tax rate if recognized. This balance represents an increase of $27,832 from the December 31, 2018 balance of $40,382, primarily due to additions for tax positions related to prior years.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. At December 31, 2019 and 2018, the Company had approximately $14,428 and $9,019, 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 2014 and 2009, respectively. In addition to being under audit in various state and local tax jurisdictions, the Company’s federal tax returns are under audit by the Internal Revenue Service for the years 2014-2017.