Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income before provision for income taxes for the years ended December 31, 2018, 2017, and 2016 consisted of the following (in thousands):



	Year Ended December 31,
	2018		2017		2016
US	$	61,972	$	71,794	$	112,483
Foreign	94,516		59,432		(55,108		)
Total income before provision for income taxes	$	156,488	$	131,226	$	57,375

The income tax provision for continuing operations consisted of the following (in thousands):



	Year Ended December 31,
	2018		2017		2016
Federal provision	21.0	%	35.0	%	35.0	%
State provision	0.1	%	0.5	%	2.3	%
Foreign rate differential⁽¹⁾	(11.7	)%	(20.0	)%	(3.6	)%
Transaction costs⁽²⁾	1.0	%	5.0	%	0.0	%
Permanent items⁽³⁾	1.1	%	10.2	%	14.7	%
Change in valuation allowance⁽⁴⁾	17.7	%	8.2	%	20.7	%
Other	0.7	%	0.8	%	(2.5	)%
Effective rate	29.9	%	39.7	%	66.6	%

________________________


(1)	Relates primarily to the lower tax rates on the income or loss attributable to international operations.


(2)	In 2018, relates primarily to transaction costs incurred in connection with the Cabot Transaction. In 2017, relates primarily to certain costs related to the withdrawn IPO costs that are disallowed for U.K. tax purposes.


(3)	Represents a provision for nondeductible items, including nondeductible interest in a foreign subsidiary and certain foreign income taxable in the U.S. under Internal Revenue Code Section 951 (Subpart F) in 2017, and an overall foreign loss in 2016.


(4)	Valuation allowance recorded as a result of certain foreign subsidiaries’ cumulative operating losses for tax purposes.

Significant components of our deferred tax assets and liabilities are as follows (in thousands):



	December 31, 2018			December 31, 2017
Deferred tax assets:
Net operating losses	$	42,013		$	46,615
Accrued expenses	17,715			14,708
Differences in income recognition related to receivable portfolios	13,857			20,612
Other	4,825			522
Difference in basis of bond and loan costs	3,728			7,878
Prepaid expenses	2,949			—
Stock-based compensation expense	2,796			4,777
State taxes	174			—
Total deferred tax assets	88,057			95,112
Valuation allowance	(46,516		)	(34,642		)
Total deferred tax assets net of valuation allowance	41,541			60,470
Deferred tax liabilities:
Deferred court costs	(23,484		)	(20,207		)
Other	(3,403		)	(9,144		)
Difference in basis of depreciable and amortizable assets	(1,937		)	(20,632		)
State taxes	—			(1,237		)
Total deferred tax liabilities	(28,824		)	(51,220		)
Net deferred tax asset⁽¹⁾	$	12,717		$	9,250

________________________


(1)	The Company operates in multiple jurisdictions. In accordance with authoritative guidance relating to income taxes, deferred tax assets and liabilities are netted for each tax-paying component of the Company within a particular tax jurisdiction and presented as a single amount in the statement of financial condition.

A reconciliation of the beginning and ending amounts of unrecognized tax benefit is as follows (in thousands):



	Amount
Balance at December 31, 2015	$	47,949
Decreases related to prior year tax positions	(1,657		)
Increases related to prior year tax positions	2,505
Increases related to current year tax positions	1,259
Decreases related to settlements with taxing authorities	(31,111		)
Balance at December 31, 2016	18,945
Increases related to current year tax positions	5,902
Decreases related to settlements with taxing authorities	(228		)
Decreases related to current year tax positions	(4,599		)
Balance at December 31, 2017	20,020
Increases related to prior year tax positions	256
Increases related to current year tax positions	1,958
Decrease related to expiration of statute of limitations	(3,221		)
Decreases related to settlements with taxing authorities	(461		)
Balance at December 31, 2018	$	18,552