Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
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,
2024 2023 2022
As Revised As Revised
(in thousands)
Current:
  Federal $ 39,122  $ 1,250  $ 658 
  Foreign 253,442  229,073  103,320 
  State 24,308  23,171  4,764 
Total current 316,872  253,494  108,742 
Deferred:
  Federal (557,399) 5,982  6,223 
  Foreign (126,423) (51,209) (397)
  State (24,748) 1,209  1,373 
Total deferred (708,570) (44,018) 7,199 
Income tax expense (benefit) $ (391,698) $ 209,476  $ 115,941 
The domestic income before income taxes was $31.8 million, $237.5 million and $217.0 million for 2024, 2023 and 2022, respectively. Foreign income before income taxes was $707.6 million, $675.8 million and $273.5 million for the years ended ended December 31, 2024, 2023 and 2022, respectively.
Significant components of our deferred tax liabilities and assets are as follows:
December 31,
2024 2023
(in thousands)
Deferred tax liabilities:
          Intangible assets $ 282,200  $ 327,249 
          Leases 210,904  205,757 
          Other 45,075  38,132 
          Hedge investments 5,395  7,394 
          Prepaid expenses 3,802  3,494 
Total deferred tax liabilities 547,376  582,026 
Deferred tax assets:
          Net operating loss carryforwards 763,205  812,034 
          Accrued expenses 251,416  180,268 
          Leases 244,476  239,503 
          Capitalized research and development 90,477  67,516 
          Interest limitation 69,128  53,698 
          Other 61,555  30,580 
          Foreign tax and other credit carryforwards 51,153  51,351 
          Intangible assets 12,411  48,088 
          Equity compensation 10,831  11,504 
Total gross deferred tax assets 1,554,652  1,494,542 
          Valuation allowance 569,495  1,194,374 
Total net deferred tax assets 985,157  300,168 
Net deferred tax assets (liabilities) $ 437,781  $ (281,858)

Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction. The Company recorded valuation allowances of $569.5 million and $1.2 billion as of December 31, 2024 and 2023, respectively. Deferred income tax assets and liabilities are recorded related to net operating losses and temporary differences between the book and tax basis of assets and liabilities expected to produce tax deductions and income in the future. The realization of these assets depends on recognition of sufficient future taxable income in specific tax jurisdictions in which those temporary differences or net operating losses relate.
In assessing the need for a valuation allowance, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized using available positive and negative evidence, including future reversals of temporary differences, tax-planning strategies and future taxable income, to estimate whether sufficient future taxable income will be generated to permit use of deferred tax assets. A significant piece of objective negative evidence evaluated is the cumulative loss incurred over recent years. Such objective negative evidence limits the Company’s ability to consider other subjective positive evidence.
At December 31, 2023, the Company maintained a valuation allowance related to federal, state and foreign deferred tax assets, as there was insufficient evidence to overcome the substantial negative evidence of being in a three year cumulative loss position. At December 31, 2024, the Company is no longer in a three year cumulative loss position and concluded that it is appropriate to release the valuation allowance against a portion of its federal deferred tax assets due to the sustained positive performance and the expected future taxable income. The remaining valuation allowance primarily relates to investments in consolidated partnership and various state and foreign operating losses.
At December 31, 2024 and 2023, we recorded a net deferred tax asset of $437.8 million and a net deferred tax liability of $281.9 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations.
As of December 31, 2024, we have United States federal, state and foreign deferred tax assets related to net operating loss carryforwards of $215.1 million, $124.5 million and $423.6 million, respectively. Based on current statutory carryforward periods, the operating loss carryforwards will expire on various dates beginning in 2025. Our net operating losses may be subject to statutory limitations on the amount that can be used in any given year.
As of December 31, 2024, we have United States federal and state deferred tax assets related to credits of $25.4 million and $25.7 million, respectively. Based on current statutory carryforward periods, the credits will expire on various dates beginning in 2031.
The reconciliation of income tax computed at the United States federal statutory rates to income tax expense (benefit) is:
Year Ended December 31,
2024 2023 2022
As Revised As Revised
(in thousands)
Income tax expense at United States statutory rate of 21%
 $ 155,280  $ 187,854  $ 106,144 
Differences between foreign and United States statutory rates
 70,469  86,537  34,585 
State income taxes, net of federal tax benefits 27,844  22,889  4,893 
Nondeductible items 23,898  25,959  32,907 
United States income inclusions and exclusions (10,332) 28,450  (78,061)
Non-United States income inclusions and exclusions (9,466) (63,691) (30,783)
Tax contingencies 674  6,191  728 
Tax expense from acquired goodwill —  7,953  7,596 
Other, net 166  784  (879)
Change in valuation allowance (650,231) (93,450) 38,811 
$ (391,698) $ 209,476  $ 115,941 
Income tax expense (benefit) is principally attributable to a non-cash benefit related to the release of the valuation allowance offset by our earnings in foreign tax jurisdictions and 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.
Amounts included in non-United States income inclusions and exclusions include the favorable inclusion of Mexico’s income from subsidiaries.
Amounts included in United States income inclusions and exclusions include unfavorable inclusions for GILTI under the provisions associated with the Tax Cuts and Jobs Act (“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 change in valuation allowance for each period presented resulted primarily from changes in the income (loss) within jurisdictions with full valuation allowances.
The other category consists of current and deferred adjustments related to payable and deferred tax assets.
The following table summarizes the activity related to our unrecognized tax benefits:
Year Ended December 31,
2024 2023 2022
(in thousands)
Balance at January 1 $ 30,466  $ 22,996  $ 21,330 
Additions:
          Increase for current year positions 1,451  2,333  751 
          Increase for prior year positions 1,001  4,453  896 
          Interest and penalties for prior years 255  1,063  160 
Reductions:
          Statute lapse for prior year positions (3) —  — 
          Settlements for prior year positions (3,166) (379) (141)
Foreign exchange (312) —  — 
Balance at December 31 $ 29,692  $ 30,466  $ 22,996 
If we were to prevail on all uncertain tax positions, the net effect would be a decrease to our income tax provision of approximately $3.7 million. The remaining $26.0 million is related to various tax credits and would remain in place until the statute of limitation for those years expires. As of December 31, 2024, 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, 2024, 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 2010 through 2024 remain open to examination by the primary tax jurisdictions to which we are subject.
Recent Tax Legislation
In August 2022, the Inflation Reduction Act (IRA) was enacted in the United States, which includes health care, clean energy, and income tax provisions. The income tax provisions amend the Internal Revenue Code to include a 15% corporate alternative minimum tax effective for tax years beginning after December 31, 2022. On September 12, 2024, the Internal Revenue Service released proposed regulations which provide guidance on the application of the corporate alternative minimum tax. The Company is assessing the impact of the proposed regulations; however, there is no material impact for the current period. The Company will continue to monitor to ensure our financial results and related tax disclosures are in compliance with the IRA tax legislation.
On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) released Pillar Two model rules designed to ensure large multinational enterprises (“MNE”) pay a minimum level of tax arising in each jurisdiction they operate. Over 135 jurisdictions joined a plan to update key elements of the international tax system and provide for a coordinated system of taxation that imposes top-up tax on profits arising in a jurisdiction whenever the effective rate is below the minimum rate. Effective January 1, 2024, many of these jurisdictions have enacted a global 15% minimum effective tax rate. This minimum rate applies to MNE’s with consolidated revenue above €750 million. While additional guidance is expected from the OECD, the current Pillar Two rules do not have a material impact to our financial statement income or tax cash flows for the current period. The Company will continue to monitor further guidance from the OECD and evaluate any impact it may have to our consolidated financial results.