Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Significant components of the provision for income tax expense (benefit) are as follows:
Year Ended December 31,
2021 2020 2019
(in thousands)
Current:
  Federal $ —  $ —  $ — 
  Foreign 8,713  7,978  61,834 
  State (1,555) 1,024  5,523 
Total current 7,158  9,002  67,357 
Deferred:
  Federal 7,451  (16,366) 5,314 
  Foreign (17,434) (20,772) (6,345)
  State 344  (739) 566 
Total deferred (9,639) (37,877) (465)
Income tax expense (benefit) $ (2,481) $ (28,875) $ 66,892 

The domestic income (loss) before income taxes was $(401.4) million, $(1.5) billion and $36.1 million for 2021, 2020 and 2019, respectively. Foreign income (loss) before income taxes was $(209.9) million, $(374.5) million and $149.0 million for 2021, 2020 and 2019, respectively.
Significant components of our deferred tax liabilities and assets are as follows:
December 31,
2021 2020
(in thousands)
Deferred tax liabilities:
          Leases $ 209,758  $ 206,701 
          Intangible assets 265,092  170,517 
          Prepaid expenses 3,424  17,786 
          Other 5,829  31,835 
Total deferred tax liabilities 484,103  426,839 
Deferred tax assets:
          Intangible assets 48,738  38,846 
          Accrued expenses 105,118  40,843 
          Net operating loss carryforwards 957,509  955,160 
          Foreign tax and other credit carryforwards 45,009  51,119 
          Equity compensation 14,602  25,209 
          Leases 237,963  224,776 
          Other 84,786  34,171 
Total gross deferred tax assets 1,493,725  1,370,124 
          Valuation allowance 1,219,496  1,100,407 
Total net deferred tax assets 274,229  269,717 
Net deferred tax liabilities $ (209,874) $ (157,122)

Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction. As of December 31, 2021, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses. As a result of the valuation allowances, no tax benefits have been recognized for losses incurred in those tax jurisdictions in 2021, 2020 and 2019.
During 2021 and 2020, we recorded net deferred tax liabilities of $103.5 million and $35.3 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations. The increase in intangible assets deferred tax liability is primarily due to the OCESA acquisition.
As of December 31, 2021, we have United States federal, state and foreign deferred tax assets related to net operating loss carryforwards of $403.1 million, $150.9 million and $403.5 million, respectively. Based on current statutory carryforward periods, the operating loss carryforwards will expire on various dates beginning in 2025. Our federal net operating loss may be subject to statutory limitations on the amount that can be used in any given year.
The reconciliation of income tax computed at the United States federal statutory rates to income tax expense (benefit) is:
Year Ended December 31,
2021 2020 2019
(in thousands)
Income tax expense (benefit) at United States statutory rate of 21%
 $ (128,366) $ (389,900) $ 38,872 
State income taxes, net of federal tax benefits (1,267) 713  3,137 
Differences between foreign and United States statutory rates
 (11,237) (12,794) 6,384 
Non-United States income inclusions and exclusions (1,677) 1,809  (3,222)
United States income inclusions and exclusions (22,121) (16,495) (2,582)
Nondeductible items 18,413  39,861  10,118 
Tax contingencies 895  (1,302) (1,340)
Tax expense from acquired goodwill 7,795  6,950  6,107 
Change in valuation allowance 135,908  344,161  8,536 
Other, net (824) (1,878) 882 
$ (2,481) $ (28,875) $ 66,892 
Income tax expense (benefit) is principally attributable to our earnings in foreign tax jurisdictions along with state income taxes.
Amounts included in differences between foreign and United States statutory rates are impacted by changes in the mix of international earnings subject to various tax rates which can differ greatly in their proximity to the United States statutory rate. The differences between statutory rates is also impacted by our Luxembourg affiliates and tax rulings which include the application of a reduced Luxembourg effective rate to the net income before tax resulting from our financing activities in Luxembourg.
Amounts included in United States income inclusions and exclusions include the favorable impact of tax deductions for vesting of restricted stock awards and exercises of stock options partially offset in 2019 by unfavorable inclusions for GILTI under the provisions associated with the TCJA.
Nondeductible items for all years presented include the impact of increased nondeductible expenses pursuant to the provisions of the TCJA including nondeductible executive compensation. The 2020 nondeductible expenses also include adjustments for nondeductible noncontrolling interest.
The change in valuation allowance for each period presented resulted primarily from changes in the income (loss) within jurisdictions with full valuation allowances, including the United States.
The following table summarizes the activity related to our unrecognized tax benefits:
Year Ended December 31,
2021 2020 2019
(in thousands)
Balance at January 1 $ 21,732  $ 21,723  $ 34,071 
Additions:
          Increase for current year positions 524  1,689  2,215 
          Increase for prior year positions 335  —  1,898 
          Interest and penalties for prior years 36  352  458 
Reductions:
          Decrease for prior year positions —  (2,109) (3,272)
          Expiration of applicable statute of limitations —  —  — 
          Settlements for prior year positions (1,435) (17) (13,852)
Foreign exchange 138  94  205 
Balance at December 31 $ 21,330  $ 21,732  $ 21,723 
In February 2019, we reached a settlement agreement with the Canadian taxing authority regarding existing uncertain tax positions. The gross liability for unrecognized tax benefits primarily decreased in 2019 due to this settlement.
If we were to prevail on all uncertain tax positions, the net effect would be a decrease to our income tax provision of approximately $0.1 million. The remaining $21.2 million is offset by deferred tax assets that represent tax benefits that would be received in the event that we did not prevail on all uncertain tax positions. As of December 31, 2021, it is not expected that the total amounts of unrecognized tax benefits will increase or decrease materially within the next year.
We regularly assess the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations. Liabilities for income taxes are established for future income tax assessments when it is probable there will be future assessments and the amount can be reasonably estimated. Once established, liabilities for uncertain tax positions are adjusted only when there is more information available or when an event occurs necessitating a change to the liabilities. As of December 31, 2021, we believe that the resolution of income tax matters for open years will not have a material effect on our consolidated financial statements although the resolution of income tax matters could impact our effective tax rate for a particular future period.
The tax years 2009 through 2021 remain open to examination by the primary tax jurisdictions to which we are subject.