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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Total income before income taxes, classified by source of income, was as follows:
 Year Ended December 31,
(in thousands)202120202019
U.S.$355,408 $38,475 $259,943 
Outside the U.S.21,084 14,531 9,986 
Income from continuing operations before income taxes$376,492 $53,006 $269,929 
The provision for income taxes, classified by the timing and location of payment, was as follows:
Year Ended December 31,
(in thousands)202120202019
Current tax expense
Federal$71,573 $14,345 $31,556 
State15,605 4,303 10,154 
Foreign1,041 2,300 1,619 
Deferred tax (benefit) expense
Federal(2,690)(12,333)3,380 
State(1,254)(1,953)1,635 
Foreign3,260 (29,043)(1,293)
Income tax expense (benefit)$87,535 $(22,381)$47,051 
Net deferred tax assets as of December 31, 2021 were as follows:
December 31,
(in thousands)20212020
Deferred tax assets:
Accrued compensation$13,997 $13,251 
Deferred revenue36,666 26,430 
Receivable, net11,776 18,044 
Tax credits14,217 11,671 
Operating lease liabilities6,621 6,359 
Partnership interests4,398 — 
Foreign net operating losses7,478 5,749 
Non-U.S. intellectual property21,402 30,243 
Other5,727 5,420 
Total gross deferred tax assets122,282 117,167 
Less: Valuation allowance(19,734)(20,099)
       Deferred tax assets$102,548 $97,068 
Deferred tax liabilities:
Property, equipment and intangible assets$(28,276)$(20,331)
Operating lease ROU assets(4,350)(6,359)
Partnership interests— (550)
Other(1,279)(2,083)
       Deferred tax liabilities(33,905)(29,323)
Net deferred tax assets$68,643 $67,745 
The Company assesses available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Based on this evaluation, the Company recorded a net change to its valuation allowance of $0.4 million due to a $2.9 million decrease in the foreign valuation allowance, primarily related to the Dutch deferred tax asset, partially offset by a $2.5 million increase in the valuation allowance related to state tax credits.
In 2021, the Company identified $14.2 million of state tax credit carryforwards due to expire between 2030 and 2035. The Company believes that it is more likely than not that these benefits will not be realized. Accordingly, the Company has provided a tax-effected valuation allowance of $14.2 million for these credits. Additionally, the Company has provided a tax-effected valuation allowance of $5.5 million on its foreign deferred tax assets.
As of December 31, 2021, the Company had gross foreign net operating losses ("NOLs") of $26.6 million. The Company believes that it is more likely than not that some of these benefits will not be realized. Accordingly, the Company recorded a gross valuation allowance of $7.0 million on the deferred tax assets related to these foreign net operating losses. We have $26.0 million of foreign NOLs with an indefinite carryforward life.
On January 1, 2018, the Company adopted ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other than Inventory ("ASU 2016-16"), which provides guidance on recognition of current income tax consequences for intercompany asset transfers (other than inventory) at the time of transfer. On January 1, 2020, the Company completed a reorganization of its foreign legal entity structure. In accordance with ASU 2016-16, the Company recorded a tax benefit of $34.6 million and a corresponding deferred tax asset due to the reorganization. In 2020, due to a decrease in our forecasted international income resulting from adverse impacts of the COVID-19 pandemic, the Company recorded a valuation allowance of $5.7 million reflecting a change in the anticipated realizability of this deferred tax asset. In 2021, due to changes in Dutch tax law, the Company reduced the carrying value of the deferred tax asset by $4.2 million and decreased the corresponding valuation allowance by $2.7 million. As of December 31, 2021, the balance of this deferred tax asset is $21.4 million, net of current year amortization, and the balance of the corresponding valuation allowance is $3.0 million.
The statutory United States federal income tax rate reconciles to the effective income tax rates for continuing operations as follows:
 Year Ended December 31,
 202120202019
Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal tax benefit3.1 %4.6 %3.5 %
Benefits related to foreign operations(0.2)%(4.2)%(0.6)%
Expenses (benefits) related to compensation, net0.5 %(5.8)%(1.3)%
Unrecognized tax positions0.2 %4.7 %2.0 %
International Reorganization1.1 %(65.2)%— %
Tax credits(1.8)%(15.2)%(9.9)%
Valuation allowance(0.2)%17.5 %3.4 %
Other(0.4)%0.4 %(0.7)%
Effective income tax rates23.3 %(42.2)%17.4 %
The Company's effective income tax rates from continuing operations were 23.3%, (42.2)% and 17.4% for the years ended December 31, 2021, 2020 and 2019, respectively.
The effective income tax rate for the year ended December 31, 2021 was higher than the U.S. federal income tax rate of 21.0% primarily due to state income taxes, $1.7 million of additional tax expense related to compensation, and a $1.5 million reduction in the net carrying value of our Dutch deferred tax asset, partially offset by tax credits of $3.7 million. The effective income tax rate for the year ended December 31, 2020 was lower than the U.S. federal income tax rate of 21% due to the impact of our international reorganization under ASU 2016-16 (partially offset by the related valuation allowance), tax credits of $3.0 million, $3.1 million of additional tax benefit related to compensation, and the impact of foreign operations, partially offset by state income taxes, and a change in estimated uncertain tax positions.

As of December 31, 2021, 2020 and 2019, the Company’s gross unrecognized tax benefits totaled $11.1 million, $10.2 million, and $7.7 million, respectively. After considering the deferred income tax accounting impact, it is expected that approximately $8.0 million of the total as of December 31, 2021 would favorably affect the effective tax rate if resolved in the Company’s favor.
The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:
(in thousands)202120202019
Balance, January 1$10,193 $7,738 $1,588 
Changes for tax positions of prior years156 1,174 4,633 
Increases for tax positions related to the current year1,618 1,281 2,084 
Settlements and lapsing of statutes of limitations(820)— (567)
Balance, December 31$11,147 $10,193 $7,738 
It is reasonably possible that the Company’s unrecognized tax benefits could decrease within the next 12 months by as much as $9.5 million due to settlements and the expiration of applicable statutes of limitations. The Company's federal income tax return for tax years 2015 and 2016 are currently under examination by the Internal Revenue Service for a tax credit refund claim. The Company's federal income tax return for tax years 2017 and 2018 are also under examination by the Internal Revenue Service. Further, the Company's federal income tax returns for tax years 2019 and 2020 are subject to examination by the Internal Revenue Service.
The practice of the Company is to recognize interest and penalties related to income tax matters in the provision for income taxes. The Company did not incur any material interest or penalties for 2021 and 2020. The Company had $0.4 million and $0.5 million of accrued interest and penalties on December 31, 2021 and 2020, respectively.
The Tax Cuts and Jobs Act subjects a U.S. shareholder to a minimum tax on "global intangible low-taxed income" ("GILTI") earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for GILTI states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred. The Company has elected to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred and has incurred tax for the year ended December 31, 2021.
On March 27, 2020, in response to the COVID-19 pandemic, the “Coronavirus Aid, Relief and Economic Security Act” (“CARES”) was signed into law by the President of the United States. The CARES Act includes, among other things, U.S. corporate income tax provisions related to net operating loss carryback periods, alternative minimum tax credits, modifications to interest deduction limitations and technical corrections on tax depreciation methods for qualified improvement property. Many other countries have also introduced various corporate income tax relief provisions in response to the pandemic. The Company does not believe that any of these changes will have a material effect on our financial statements.