Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
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,
2023 2022 2021
(in thousands)
Current:
  Federal $ 1,250  $ 658  $ — 
  Foreign 179,824  83,633  8,713 
  State 23,171  4,764  (1,555)
Total current 204,245  89,055  7,158 
Deferred:
  Federal 5,982  6,223  7,451 
  Foreign (51,209) (397) (17,434)
  State 1,209  1,373  344 
Total deferred (44,018) 7,199  (9,639)
Income tax expense (benefit) $ 160,227  $ 96,254  $ (2,481)

The domestic income (loss) before income taxes was $237.5 million, $217.0 million and $(401.4) million for 2023, 2022 and 2021, respectively. Foreign income (loss) before income taxes was $657.0 million, $288.4 million and $(209.9) million for 2023, 2022 and 2021, respectively.
Significant components of our deferred tax liabilities and assets are as follows:
December 31,
2023 2022
(in thousands)
Deferred tax liabilities:
          Leases $ 205,757  $ 217,919 
          Intangible assets 327,249  297,894 
          Prepaid expenses 3,494  12,490 
          Hedge investments 7,394  10,584 
          Other 38,132  19,086 
Total deferred tax liabilities 582,026  557,973 
Deferred tax assets:
          Intangible assets 48,088  51,634 
          Accrued expenses 180,268  139,432 
          Net operating loss carryforwards 812,034  848,735 
          Foreign tax and other credit carryforwards 51,351  51,055 
          Equity compensation 11,504  9,452 
          Leases 239,503  250,183 
          Interest limitation 53,698  84,599 
          Capitalized R&D 67,516  35,149 
          Other 30,580  53,359 
Total gross deferred tax assets 1,494,542  1,523,598 
          Valuation allowance 1,194,374  1,240,881 
Total net deferred tax assets 300,168  282,717 
Net deferred tax liabilities $ (281,858) $ (275,256)

Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction. As of December 31, 2023, 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 2023, 2022 and 2021.
During 2023 and 2022, we recorded net deferred tax liabilities of $281.9 million and $275.3 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations.
As of December 31, 2023, we have United States federal, state and foreign deferred tax assets related to net operating loss carryforwards of $268.5 million, $140.9 million and $402.6 million, respectively. Our 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,
2023 2022 2021
(in thousands)
Income tax expense (benefit) at United States statutory rate of 21%
 $ 187,854  $ 106,144  $ (128,366)
State income taxes, net of federal tax benefits 22,889  4,893  (1,267)
Differences between foreign and United States statutory rates
 37,288  14,898  (11,237)
Non-United States income inclusions and exclusions (63,691) (30,783) (1,677)
United States income inclusions and exclusions 28,450  (78,061) (22,121)
Nondeductible items 25,959  32,907  18,413 
Tax contingencies 6,191  728  895 
Tax expense from acquired goodwill 7,953  7,596  7,795 
Change in valuation allowance (93,450) 38,811  135,908 
Other, net 784  (879) (824)
$ 160,227  $ 96,254  $ (2,481)
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.
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 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, including the United States.
The following table summarizes the activity related to our unrecognized tax benefits:
Year Ended December 31,
2023 2022 2021
(in thousands)
Balance at January 1 $ 22,996  $ 21,330  $ 21,732 
Additions:
          Increase for current year positions 2,333  751  524 
          Increase for prior year positions 4,453  896  335 
          Interest and penalties for prior years 1,063  160  36 
Reductions:
          Settlements for prior year positions (379) (141) (1,435)
Foreign exchange —  —  138 
Balance at December 31 $ 30,466  $ 22,996  $ 21,330 
If we were to prevail on all uncertain tax positions, the net effect would be a decrease to our income tax provision of approximately $6.5 million. The remaining $23.9 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, 2023, 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, 2023, 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 2023 remain open to examination by the primary tax jurisdictions to which we are subject.