XML 40 R25.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income (loss) from continuing operations before taxes consisted of the following:
Years Ended December 31,
202120202019
U.S.$(85,258)$(243,760)$500 
International77,843 60,391 26,232 
Total$(7,415)$(183,369)$26,732 

The provision (benefit) for income taxes from continuing operations consisted of the following:
Years Ended December 31,
202120202019
U.S. Federal:
Current$(7,419)$(10,582)$(18,789)
Deferred(13,825)6,516 11,500 
(21,244)(4,066)(7,289)
U.S. State and Local:
Current5,401 (2,569)(9,142)
Deferred(5,827)4,100 8,000 
(426)1,531 (1,142)
International:
Current10,979 4,993 9,993 
Deferred(231)4,664 (14,689)
10,748 9,657 (4,696)
Total current8,961 (8,158)(17,938)
Total deferred(19,883)15,280 4,811 
Total (benefit) provision for income taxes$(10,922)$7,122 $(13,127)
Effective tax rate147.3 %(3.9)%(49.1)%
The effective tax rate for 2021 includes benefits of $7 million from the resolution of tax matters, $5 million due to tax legislation in the U.K., $3 million from an affiliate reorganization and $2 million from the vesting of restricted stock, partially offset by charges of $6 million on the pre-tax gain of $10 million from the sale of a business as the tax basis was lower than the book basis and $1 million for the write-off of deferred tax assets associated with the expiration of out-of-the-money stock options.
The effective tax rate for 2020 includes a $12 million charge for the surrender of company owned life insurance policies, a $5 million benefit for the correction of tax balances in certain domestic and international tax jurisdictions, a $3 million benefit due to regulations enacted into law, a $2 million benefit for the carryback of net operating losses resulting from the CARES Act and a benefit of $2 million on the $198 million goodwill impairment charge as the majority of this charge is nondeductible.
The effective tax rate for 2019 includes benefits of $23 million from the release of a foreign valuation allowance and $9 million from the resolution of certain tax examinations. The effective tax rate for 2019 also includes a tax of $3 million on the $18 million book loss from the disposition of operations in certain international markets, primarily due to nondeductible basis differences.
A reconciliation of income taxes computed at the federal statutory rate and our provision for income taxes consist of the following:
Years Ended December 31,
202120202019
Federal statutory provision$(1,558)$(38,507)$5,613 
State and local income taxes (1)
(336)1,209 (901)
Impact of foreign operations taxed at rates other than the U.S. statutory rate (2)
(2,220)(3,345)(18,541)
Accrual/release of uncertain tax amounts related to foreign operations(7,288)1,802 191 
U.S. tax impacts of foreign income in the U.S.4,441 (2,300)5,587 
CARES Act carryback benefit(2,270)(1,646)— 
Tax incentives/credits/exempt income(500)(750)(5,437)
Unrealized stock compensation benefits(505)2,312 2,176 
Surrender of company-owned life insurance policies— 10,313 — 
Goodwill impairment— 40,328 — 
Other, net (3)
(686)(2,294)(1,815)
(Benefit) provision for income taxes$(10,922)$7,122 $(13,127)
(1)    Includes a charge of $2 million for the surrender of company-owned life insurance for the year ended December 31, 2020.
(2)    Includes a benefit of $5 million for a deferred rate change for the year ended December 31, 2021, a benefit of $3 million for tax balance corrections and a deferred tax rate change benefit of $2 million for the year ended December 31, 2020 and a foreign valuation allowance release of $23 million and a $3 million tax on the disposition of operations in certain international markets for the year ended December 31, 2019.
(3)     Includes a $3 million benefit from an affiliate reorganization and charge of $3 million related to the sale of a business for the year ended December 31, 2021, as well as a $2 million benefit related to tax balance corrections and a $1 million charge related to interest for the year ended December 31, 2020.
Deferred tax liabilities and assets consisted of the following:
December 31,
20212020
Deferred tax liabilities:
Depreciation$(85,544)$(69,900)
Deferred profit (for tax purposes) on sale to finance subsidiary(26,745)(28,101)
Lease revenue and related depreciation(202,862)(190,852)
Intangible assets(76,672)(81,816)
Operating lease liability(46,496)(50,071)
Other(25,438)(27,865)
Gross deferred tax liabilities(463,757)(448,605)
Deferred tax assets:
Postretirement medical benefits34,681 42,423 
Pension20,472 48,385 
Operating lease asset52,271 54,538 
Inventory and equipment capitalization1,866 3,903 
Restructuring charges1,548 2,022 
Long-term incentives12,308 12,905 
Net operating loss113,025 82,823 
Tax credit carry forwards65,931 64,070 
Tax uncertainties gross-up6,929 6,656 
Other58,457 42,079 
Gross deferred tax assets367,488 359,804 
Less: Valuation allowance(121,778)(116,543)
Net deferred tax assets245,710 243,261 
Total deferred taxes, net$(218,047)$(205,344)
The valuation allowance relates primarily to certain foreign, state and local net operating loss and tax credit carryforwards that will more-likely-than-not expire unutilized.
We have a federal net operating loss carryforward of $157 million as of December 31, 2021, the majority of which has an indefinite carryforward period. We have net operating loss carryforwards in international jurisdictions of $163 million as of December 31, 2021, of which $150 million can be carried forward indefinitely and the remainder expire over the next 20 years. We also have net operating loss carryforwards in most states totaling $1.1 billion that will expire over the next 20 years. In addition, we have tax credit carryforwards of $66 million, of which $51 million can be carried forward indefinitely and the remainder expire over the next 11 years.
As of December 31, 2021, we assert that we are permanently reinvested in our pre-1987 and post-2017 undistributed earnings of $264 million as well as all other outside basis differences. While a determination of the full liability that would be incurred if these earnings were repatriated is not practicable, we have estimated the withholding taxes would be approximately $2 million.
Uncertain Tax Positions
A reconciliation of the amount of unrecognized tax benefits is as follows:
202120202019
Balance at beginning of year$50,064 $60,302 $71,458 
Increases from prior period positions3,016 2,147 510 
Decreases from prior period positions(4,247)(47)(9,711)
Increases from current period positions492 3,472 5,052 
Decreases relating to settlements with tax authorities(1,270)(12,508)(2,626)
Reductions from lapse of applicable statute of limitations(2,983)(3,302)(4,381)
Balance at end of year$45,072 $50,064 $60,302 
The amount of the unrecognized tax benefits at December 31, 2021, 2020 and 2019 that would affect the effective tax rate if recognized was $39 million, $44 million and $54 million, respectively.
On a regular basis, we conclude tax return examinations, statutes of limitations expire, and court decisions interpret tax law. We regularly assess tax uncertainties in light of these developments. As a result, it is reasonably possible that the amount of our unrecognized tax benefits will decrease in the next 12 months, and we expect this change could be up to 10% of our unrecognized tax benefits. We recognize interest and penalties related to uncertain tax positions in our provision for income taxes. Amounts included in our provision for income taxes related to interest and penalties on uncertain tax positions for each of the years ended December 31, 2021, 2020 and 2019 were not significant. We had approximately $4 million accrued for the payment of interest and penalties at both December 31, 2021 and 2020.

Other Tax Matters
The Internal Revenue Service examinations of our consolidated U.S. income tax returns for tax years prior to 2018 are closed to audit; however, various post-2016 U.S. state and local tax returns are still subject to examination, with some states in appeals from 2011. For our significant non-U.S. jurisdictions, Canada is closed to examination through 2016 except for a specific issue arising in earlier years, France is closed through 2019, Germany is closed through 2016 and the U.K. is closed through 2018. We also have other less significant tax filings currently subject to examination.
We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we have operations and account for the related financial statement implications. We believe we have established tax reserves that are appropriate given the possibility of tax adjustments. However, determining the appropriate level of tax reserves requires judgment regarding the uncertain application of tax law and the possibility of tax adjustments. Future changes in tax reserve requirements could have a material impact, positive or negative, on our results of operations, financial position and cash flows.