

	2019			2018			2017
Current tax (benefit) provision:
Federal	$	(22,704	)	$	(29,982	)	$	41,090
State	3,835			8,085			6,336
Foreign	71,286			64,274			51,244
Deferred tax (benefit) provision:
Federal	(13,987		)	5,954			(24,136		)
State	(12,212		)	701			21,689
Foreign	4,968			(7,140		)	(4,367		)
Change in valuation allowance	22,164			2,824			(430		)
Total	$	53,350		$	44,716		$	91,426

For the year ended December 31, 2017, income taxes incurred on intercompany sales were deferred on the balance sheet and amortized into earnings over the economic life of the intellectual property that was sold. Beginning in 2018, all income taxes incurred on intercompany sales are included in the current tax provision.



	2019		2018		2017
U.S. federal income tax rate	21.0	%	21.0	%	35.0	%
State taxes	1.0		1.2		1.5
Share-based compensation	0.3		1.0		3.7
U.S. federal, state and foreign research and development credits	(6.0	)	(7.6	)	(7.0	)
Foreign earnings	(6.1	)	(6.0	)	(7.9	)
Domestic production activities deduction	—		—		(0.7	)
Impact of TCJA, net	—		(0.8	)	6.4
Impact of acquisition-related uncertain tax position	—		—		(2.9	)
Release of uncertain tax position reserve	(5.9	)	(1.9	)	(0.5	)
Intercompany sale of intellectual property	1.9		3.3		—
Valuation allowance	4.2		0.8		—
Other	(0.4	)	2.0		1.5
	10.0	%	13.0	%	29.1	%

In December 2017 the TCJA was enacted, making significant changes to the U.S. Internal Revenue Code. Changes included a corporate income tax rate decrease from 35.0% to 21.0%, the implementation of a modified territorial tax system, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017 and the repeal of the domestic production activities deduction, among other items.



	2019			2018
Accrued bonus	$	25,487		$	24,093
Deferred revenue	3,874			4,188
Deferred rent	—			11,245
Operating lease liability	147,375			—
Stock-based compensation	20,606			20,345
NOLs	25,851			15,743
Unrealized losses	1,529			1,039
Tax credit carryforwards	87,305			70,235
License income	—			2,245
Convertible senior notes interest	22,506			4,724
Other	12,501			11,759
Deferred tax assets	347,034			165,616
Depreciation and amortization	(16,896		)	(23,912		)
Acquired intangible assets	(51,758		)	(45,773		)
Operating lease ROU asset	(132,949		)	—
Deferred commissions	(14,843		)	(14,232		)
Internal-use software development costs capitalized	(57,201		)	(63,586		)
Deferred tax liabilities	(273,647		)	(147,503		)
Valuation allowance	(26,046		)	(2,824		)
Net deferred tax assets	$	47,341		$	15,289

Valuation allowances will be recognized on deferred tax assets if it is more-likely-than-not that some or all of the deferred tax assets will not be utilized. In measuring deferred tax assets, the Company considers all available evidence, both positive and negative, to determine whether a valuation allowance is needed. As of December 31, 2019, the Company recorded a $26.0

million valuation allowance against deferred tax assets related to tax credits and state NOLs in which it is more-likely-than-not that such attributes will expire prior to utilization. The change in the valuation allowance during 2019 was $23.2 million.



	2019		2018		Expirations at Various Dates Through:
NOL carryforwards:
Federal	$	87,500	$	52,500	2037
State	20,500		20,500		2039
Foreign	11,600		8,500		—
Federal and state research and development tax credit and other credit carryforwards	88,570		88,200		2034

As of December 31, 2019, accumulated earnings outside the U.S. totaled $1.1 billion, the majority of which have been taxed due to the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings and the tax on global intangible low taxed income ("GILTI") required by the TCJA. No provision for U.S. income and foreign withholding taxes has been provided for any remaining undistributed foreign earnings not subject to tax under the TCJA, or any additional basis differences inherent in these entities, as these amounts continue to be indefinitely reinvested. Determination of the amount of the unrecognized deferred tax liability on outside basis differences is not practicable because of the complexity of laws and regulations, the varying tax treatment of alternative repatriation scenarios, and the variation due to multiple potential assumptions relating to the timing of any future repatriation.



	2019			2018			2017
Balance at beginning of year	$	64,892		$	85,845		$	69,117
Gross increases – tax positions of prior periods	74			2,704			2,692
Gross increases – current period tax positions	2,006			3,021			27,163
Gross decreases – tax positions of prior periods	(5,201		)	(15,287		)	(277		)
Gross decreases – lapse of applicable statute of limitations	(28,672		)	(6,186		)	(12,850		)
Gross decreases – settlements	(5,740		)	(5,205		)	—
Balance at end of year	$	27,359		$	64,892		$	85,845

As of December 31, 2019, 2018 and 2017, the Company had approximately $32.6 million, $67.8 million and $90.7 million of unrecognized tax benefits, respectively. Total interest and penalties for unrecognized tax benefits include $7.8 million, $11.8 million and $10.7 million as of December 31, 2019, 2018 and 2017, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were $1.1 million, $1.3 million and $2.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. The amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate is approximately $32.6 million.

As of December 31, 2019, it is reasonably possible that $2.8 million of unrecognized tax benefits may be recognized within the next 12 months due to the expiration of local statutes of limitations. Certain U.S. state and foreign income tax returns from 2011 through 2017 are currently under audit. The Company has reserved for those positions that are not more-likely-than-not to be sustained.

The Company is also involved in litigation related to certain adverse audit determinations. In the second quarter of 2018, the Company filed an appeal with the Massachusetts Appellate Tax Board contesting the adverse audit findings related to certain tax benefits and exemptions. The appeal hearing was held in late 2019 and the Company awaits the judge's determination. The Company has determined that it is more-likely-than-not that it will prevail, and no reserve has been

recorded related to these controversies. However, over the next 12 months, the Company's current assumptions and positions could change based on audit determinations and other events impacting its analysis. Such events, if resolved unfavorably, could significantly impact the Company’s effective income tax rate and results of operations. The Company has estimated that an adverse ruling related to its Massachusetts controversy could result in an gross income tax charge of approximately $35.0 million, which could be partially offset by certain state tax credits of $25.0 million which are not currently benefited as a result of the Company's valuation allowance assessment.