Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Before Income Taxes

Polaris’ income from continuing operations before income taxes was generated from its United States and foreign operations as follows (in thousands):

	For the Years Ended December 31,
	2018		2017		2016
United States	$	344,728	$	264,207	$	262,403
Foreign	84,521		54,584		50,848
Income from continuing operations before income taxes	$	429,249	$	318,791	$	313,251

Components of Provision for Income Taxes

Components of Polaris’ provision for income taxes for continuing operations are as follows (in thousands):

	For the Years Ended December 31,
	2018		2017		2016
Current:
Federal	$	39,051	$	41,134	$	103,717
State	3,759		7,264		4,780
Foreign	27,539		22,267		17,367
Deferred	23,643		75,634		(25,561		)
Total provision for income taxes for continuing operations	$	93,992	$	146,299	$	100,303

Reconciliation of Federal Statutory Income Tax Rate to Effective Tax Rate

Reconciliation of the Federal statutory income tax rate to the effective tax rate is as follows:

	For the Years Ended December 31,
	2018		2017		2016
Federal statutory rate	21.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.9		1.4		1.4
Domestic manufacturing deduction	(1.4	)	(0.5	)	(2.1	)
Research and development tax credit	(3.1	)	(5.6	)	(4.3	)
Stock based compensation	(1.4	)	(4.4	)	—
Valuation allowance	0.2		1.2		—
Tax Reform impact	0.4		17.4		—
Non-deductible expenses	—		2.0		2.4
Foreign tax rate differential	1.3		(0.3	)	(1.6	)
Other permanent differences	3.0		(0.3	)	1.2
Effective income tax rate for continuing operations	21.9	%	45.9	%	32.0	%

Net Deferred Income Taxes

The net deferred income taxes consist of the following (in thousands):

	December 31,
	2018			2017
Deferred income taxes:
Inventories	$	11,171		$	11,072
Accrued expenses	105,218			102,318
Cost in excess of net assets of businesses acquired	(22,916		)	(15,171		)
Property and equipment	(72,252		)	(52,757		)
Employee compensation and benefits	56,286			55,350
Net operating loss and other loss carryforwards	13,847			13,628
Valuation allowance	(10,370		)	(9,057		)
Total net deferred income tax asset	$	80,984		$	105,383

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

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

	For the Years Ended December 31,
	2018			2017
Balance at January 1,	$	19,096		$	25,001
Gross increases for tax positions of prior years	6,586			1,935
Gross increases for tax positions of current year	2,522			2,397
Decreases due to settlements and other prior year tax positions	(2,550		)	(10,338		)
Currency translation effect on foreign balances	(143		)	101
Balance at December 31,	25,511			19,096
Reserves related to potential interest at December 31,	3,090			1,018
Unrecognized tax benefits at December 31,	$	28,601		$	20,114