Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Taxes

NOTE 7. TAXES

Income Taxes

Income tax expense (benefit) includes the following components:

	Federal			State			Foreign		Total
2024
Current	$	64,040		$	35,032		$	189,233	$	288,305
Deferred		(2,746	)		(2,392	)		—		(5,138	)
	$	61,294		$	32,640		$	189,233	$	283,167
2023
Current	$	87,461		$	24,481		$	174,223	$	286,165
Deferred		(20,795	)		(2,121	)		—		(22,916	)
	$	66,666		$	22,360		$	174,223	$	263,249
2022
Current	$	149,840		$	63,140		$	295,546	$	508,526
Deferred		(27,904	)		(5,336	)		—		(33,240	)
	$	121,936		$	57,804		$	295,546	$	475,286

The components of earnings before income taxes are as follows:

	2024		2023		2022
United States	$	514,125	$	512,682	$	987,186
Foreign		580,675		502,346		848,705
	$	1,094,800	$	1,015,028	$	1,835,891

Income tax expense differs from amounts computed by applying the United States Federal income tax rate of 21% when compared to earnings before income taxes as a result of the following:

	2024			2023			2022
Computed “expected” tax expense	$	229,908		$	213,156		$	385,537
Increase (decrease) in income taxes resulting from:
Effect of foreign taxes		22,146			27,711			32,293
State income taxes, net of Federal income tax benefit		25,787			17,665			45,665
Nondeductible executive compensation		4,327			4,965			8,019
Stock compensation expense, net		2,215			(1,321	)		454
Other, net		(1,216	)		1,073			3,318
	$	283,167		$	263,249		$	475,286

In 2024, 2023 and 2022, the Company benefited from U.S. Federal tax credits totaling $32.5 million, $24.1 million, and $41.6 million, respectively, principally because of withholding taxes related to the Company's foreign operations, as well as U.S. income tax benefits for FDII of $21.6 million, $16.2 million, and $41.7 million, respectively. These amounts were offset by the effect of higher foreign tax rates of the Company's international subsidiaries, when compared to the U.S. Federal income tax rate of 21%, as well as certain expenses that are no longer deductible under the 2017 Tax Act, including certain executive compensation in excess of amounts allowed. For the years 2024, 2023 and 2022, there was no BEAT expense and GILTI expense was insignificant.

The tax effects of temporary differences and tax credits that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows:

Years ended December 31,	2024		2023
Deferred Tax Assets:
Deductible stock compensation expense, net	$	6,243	$	7,199
Operating lease liabilities		95,895		75,659
Capitalized R&D expenses		54,969		39,723
Accrued third party obligations, deductible for taxes upon economic performance		6,382		10,878
Excess of financial statement over tax depreciation		13,679		12,532
Foreign currency translation adjustments		17,198		15,400
Retained liability for cargo claims		1,391		1,040
Provision for credit losses on accounts receivable		1,672		856
Total gross deferred tax assets		197,429		163,287
Deferred Tax Liabilities:
Unremitted foreign earnings, net of related foreign tax credits		36,583		28,275
Operating lease assets		90,175		71,322
Total gross deferred tax liabilities		126,758		99,597
Net deferred tax assets	$	70,671	$	63,690

Based on management’s review of the Company’s tax positions, the Company had no significant unrecognized tax benefits as of December 31, 2024 and 2023.

The Company is subject to taxation in various states and many foreign jurisdictions including the People’s Republic of China, including Hong Kong, Taiwan, Vietnam, India, Mexico, Brazil, Canada, Netherlands and the United Kingdom. The Company believes that its tax positions, including intercompany transfer pricing policies, are reasonable and consistent with established transfer pricing methodologies and norms. The Company is under, or may be subject to, audit or examination and assessments by the relevant authorities in respect to these and any other jurisdictions primarily for years 2009 and thereafter. Sometimes audits result in proposed assessments where the ultimate resolution could result in significant additional tax, penalties and interest payments being required. The Indian tax authority (ITA) has asserted that additional tax applies principally related to transfer pricing and transactions between and amongst the Company and its Indian subsidiary and the applicability to an Indian service tax applicable to ocean and air imports and exports. We believe that ITA’s positions are without merit, we are defending our position vigorously in Indian courts. If these matters are adversely resolved, we would recognize significant additional tax expense, including interest and penalties. The Company establishes liabilities when, despite its belief that the tax filing positions are appropriate and consistent with tax law, it concludes that it may not be successful in realizing the tax position. In evaluating a tax position, the Company determines whether it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position and in consultation with qualified legal and tax advisors.

The total amount of the Company’s tax contingencies may increase in 2025. In addition, changes in state, federal, and foreign tax laws, including transfer pricing and changes in interpretations of these laws may increase the Company’s existing tax contingencies. The timing of the resolution of income tax examinations can be highly uncertain, and the amounts ultimately paid including interest and penalties, if any, upon resolution of the issues raised by the taxing authorities may differ significantly from the amounts recorded. It is reasonably possible that within the next twelve months the Company or its subsidiaries will undergo further audits and examinations by various tax authorities and possibly may reach resolution related to income tax and indirect tax examinations in one or more jurisdictions. These assessments or settlements could result in changes to the Company’s contingencies related to positions on tax filings in future years. The estimate of any ultimate tax liability contains assumptions based on experiences, judgments about potential actions by taxing jurisdictions as well as judgments about the likely outcome of issues that have been raised by the taxing jurisdiction. The Company cannot currently provide an estimate of the range of possible outcomes. Any interest and penalties expensed in relation to the underpayment of income taxes were insignificant for the years ended December 31, 2024, 2023, and 2022. The Company has no liability as of December 31, 2024, for the 15% corporate alternative minimum tax based on financial statement income (BMT), which became effective in 2023 in the U.S. under the Inflation Reduction Act. For the year ended December 31, 2024, the amount of Pillar Two income tax expense was insignificant. Elements of the recorded impacts of enacted tax laws and regulation could be impacted by further legislative action as well as additional interpretations and guidance issued by the Internal Revenue Service or Treasury in the U.S. and by similar governmental bodies in jurisdictions outside of the U.S.

Other Taxes

The Company is subject to multiple examinations for value added, service, payroll, or other non-income taxes in various jurisdictions. In certain cases, the Company has received assessments from the authorities. Possible losses or range of possible losses associated with these matters are either immaterial or an estimate of the possible loss or range of loss cannot be made at this time. If certain matters or a group of matters were to be decided adversely to the Company, it could result in a charge that might be material to the results of an individual fiscal quarter or year.