Entity information:
Income Taxes

The following table is a summary of the components of income (loss) before income taxes for the years ended December 31:
(Amounts in millions)
2017
 
2016
 
2015
U.S.
$
(64.1
)
 
$
28.7

 
$
(46.5
)
Foreign
27.5

 
13.8

 
16.1

(Loss) income before income taxes
$
(36.6
)
 
$
42.5

 
$
(30.4
)

Foreign income consists of income and losses from the Company’s international subsidiaries. Most of the Company’s wholly-owned subsidiaries recognize revenue based solely on services agreements with the primary U.S. operating subsidiary. The following table is a summary of the income tax expense for the years ended December 31:
(Amounts in millions)
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
(14.7
)
 
$
5.2

 
$
17.7

State
1.6

 
1.8

 
(0.5
)
Foreign
11.2

 
12.3

 
5.0

Current income tax expense
(1.9
)
 
19.3

 
22.2

Deferred:
 
 
 
 
 
Federal
(4.5
)
 
4.0

 
21.3

State
0.1

 
1.3

 
(0.8
)
Foreign
(0.5
)
 
2.0

 
4.6

Deferred income tax (benefit) expense
(4.9
)
 
7.3

 
25.1

Income tax (benefit) expense
$
(6.8
)
 
$
26.6

 
$
47.3


As of December 31, 2017, the Company had a tax payable of $35.4 million recorded in “Accounts payable and other liabilities” and a tax receivable of $25.7 million recorded in the “Other assets” on the Consolidated Balance Sheets. As of December 31, 2016, the Company had a tax payable of $27.7 million recorded in “Accounts payable and other liabilities” and a tax receivable of $4.7 million recorded in the "Other assets" on the Consolidated Balance Sheets.
The following table is a reconciliation of the expected federal income tax (benefit) expense at statutory rates to the actual income tax expense for the years ended in December 31: 
(Amounts in millions)
2017
 
2016
 
2015
Income tax expense (benefit) at statutory federal income tax rate
$
(12.8
)
 
$
14.9

 
$
(10.7
)
Tax effect of:
 
 
 
 
 
State income tax, net of federal income tax effect
0.2

 
0.6

 
(0.6
)
Valuation allowance
(3.8
)
 
(0.8
)
 
(1.0
)
International taxes
(3.0
)
 
(1.4
)
 
1.1

Net permanent difference
30.2

 
0.6

 
1.2

Change in tax reserve
1.9

 
9.1

 
(8.8
)
Stock-based compensation
(1.5
)
 
3.8

 
3.4

Estimated impact from the TCJA
(22.8
)
 
—

 
—

Deferred charge amortization
4.0

 
—

 
—

Effect of U.S. Tax Court decision
—

 
—

 
64.4

Other
0.8

 
(0.2
)
 
(1.7
)
Income tax (benefit) expense
$
(6.8
)
 
$
26.6

 
$
47.3


In 2017, the Company recognized a tax benefit of $6.8 million on pre-tax loss of $36.6 million, primarily due to recently enacted tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA") as discussed in more detail below and an accrual related to the five-year deferred prosecution agreement (the "DPA") as further discussed in Note 13 — Commitments and Contingencies.
In 2016, the Company recognized a tax expense of $26.6 million on pre-tax income of $42.5 million, primarily due to a tax settlement reached with the Internal Revenue Service ("IRS") on the matter discussed below and the reversal of tax benefits on share-based compensation. 
In 2015, the Company recognized a tax expense of $47.3 million on pre-tax loss of $30.4 million, primarily resulting from the decision of the U.S. Tax Court during the first quarter of 2015 related to the IRS matter discussed in more detail below.
On December 22, 2017, the President of the United States signed into law the TCJA. The TCJA, among other things, contains significant changes to U.S. corporate tax laws, including a permanent reduction of the corporate income tax rate, a limitation on the deductibility of business interest expense, limitation of the deduction for certain net operating losses to 80% of current year taxable income, an indefinite net operating loss carryforward, immediate deductions for new investments in certain business assets instead of deductions for depreciation expense over time, modification or repeal of many business deductions and credits (including certain foreign tax credits), a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a modified territorial system (retaining certain existing rules and containing new rules designed to include in the U.S. income tax base certain income generated in non-U.S. territories whether or not that income has been repatriated to the U.S.), a minimum taxing system related to payments deemed to erode the U.S. tax base, and a one-time tax on accumulated offshore earnings held in cash and illiquid assets (with the latter taxed at a lower rate). We continue to examine the impact the TCJA may have on the Company, which could adversely affect our business, financial condition and results of operations.
Although the Company does not consider its earnings in its foreign entities to be permanently reinvested, the deferred tax liability associated with the unremitted earnings of its foreign entities was revised under the TCJA by a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Company made a reasonable estimate for the one-time deemed mandatory repatriation and has recorded a provisional expense related its foreign E&P. The Company had an estimated $101.6 million of undistributed foreign E&P subject to the deemed mandatory repatriation. After the utilization of foreign tax credits related to undistributed foreign subsidiary E&P and other existing foreign tax credits, the Company expects a net zero liability associated with the deemed mandatory repatriation. As of December 31, 2016, a U.S. deferred tax liability of $5.2 million was recognized for the unremitted earnings of its foreign entities. However, the Company was able to make reasonable estimates of certain effects and, therefore, has recorded provisional amounts as follows:
•
As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the TCJA, the Company revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $19.8 million tax benefit in the Company’s consolidated statement of income for the year ended December 31, 2017.
•
The Company recognized a provisional net $3.0 million tax benefit for the remeasurement of previously recorded deferred tax assets and liabilities primarily associated with historical earnings in its foreign subsidiaries.
•
Subsequent to the enactment of the TCJA, the Company must make an accounting policy election to account for the tax effects of global intangible low-tax income either as a component of income tax expense in the period the tax arises, or as a component of deferred taxes on the related investments in foreign subsidiaries. The Company is currently evaluating these provisions of the TCJA and the related implications and has not finalized its accounting policy election. The Company will finalize its accounting policy election in 2018.
The following table is a summary of the Company’s deferred tax assets and liabilities as of December 31: 
(Amounts in millions)
2017
 
2016
Deferred tax assets:
 
 
 
Basis difference in revalued investments
$
61.6

 
$
101.6

Tax loss carryovers
22.3

 
34.3

Tax credit carryovers
18.0

 
39.2

Postretirement benefits and other employee benefits
17.1

 
34.0

Bad debt and other reserves
1.4

 
4.2

Other
13.2

 
8.8

Valuation allowance
(75.9
)
 
(124.2
)
Total deferred tax assets
57.7

 
97.9

Deferred tax liability:
 
 
 
Depreciation and amortization and other
(62.7
)
 
(100.8
)
Total deferred tax liability
(62.7
)
 
(100.8
)
Net deferred tax liability
$
(5.0
)
 
$
(2.9
)

As of December 31, 2017, net deferred tax asset positions of $8.1 million were included in “Other assets” and net deferred tax liability positions of $13.1 million were included in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. As of December 31, 2016, net deferred tax asset positions of $4.4 million were reflected in "Other assets" and net deferred tax liability positions of $7.3 million were included in "Accounts payable and other liabilities" in the Consolidated Balance Sheets. The valuation allowance as of December 31, 2017 and December 31, 2016 relates primarily to basis differences in revalued investments, capital loss carryovers and, to a smaller extent, certain foreign tax loss carryovers.
The following table is a summary of the amounts and expiration dates of tax loss carry-forwards (not tax effected) and credit carry-forwards as of December 31, 2017: 
(Amounts in millions)
Expiration
Date
 
Amount
U.S. capital loss carry-forwards
2018 - 2022
 
$
44.2

U.S. net operating loss carry-forwards
2022 - 2037
 
$
13.8

U.S. tax credit carry-forwards
2024 - 2037
 
$
18.0

U.S. federal minimum tax credit carry-forwards
Indefinite
 
$
17.8


The IRS completed its examination of the Company’s consolidated income tax returns for the tax years 2011 through 2013 and issued a Revenue Agent Report (“RAR”) in the first quarter of 2015 that included disallowing $100.0 million of deductions related to payments the Company made to the U.S. Department of Justice ("U.S. DOJ") pursuant to the Deferred Prosecution Agreement. In April 2016, the Company entered into a settlement agreement with the IRS allowing a deduction of $39.3 million. As of December 31, 2016, the Company had fully settled this matter with $21.2 million of existing deferred tax assets and $0.5 million of cash after recognizing an additional $7.7 million of Income tax expense for the year ended December 31, 2016. The state tax liabilities related to the federal settlement have yet to be settled due to the pending implications of the security losses under litigation.
Unrecognized tax benefits are recorded in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. The following table is a reconciliation of unrecognized tax benefits for the years ended December 31:
(Amounts in millions)
2017
 
2016
 
2015
Beginning balance
$
24.2

 
$
30.5

 
$
31.7

Additions based on tax positions related to prior years
0.3

 
11.2

 
8.3

Additions based on tax positions related to current year
3.4

 
4.6

 
0.2

Settlements with cash or attributes
—

 
(21.4
)
 
—

Foreign currency translation
0.8

 
—

 
—

Reductions for tax positions of prior years and other
—

 
(0.7
)
 
(9.7
)
Ending balance
$
28.7

 
$
24.2

 
$
30.5


As of December 31, 2017, 2016 and 2015, the liability for unrecognized tax benefits was $28.7 million, $24.2 million and $30.5 million, respectively, exclusive of interest and penalties. For 2017 and 2016, the net amount of unrecognized tax benefits that if recognized could impact the effective tax rate was $17.3 million and $16.7 million, respectively. For 2015, all of the unrecognized tax benefits could impact the effective tax rate if recognized. The increases in 2017 were related to a foreign tax position consistent with 2016. The Company accrues interest and penalties for unrecognized tax benefits through “Income tax expense” in the Consolidated Statements of Operations. The Company recorded $2.5 million, $2.4 million and $1.9 million in interest and penalties in its Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, the Company had a total of $8.9 million and $6.4 million, respectively, accrued for interest and penalties within "Accounts payable and other liabilities." As a result of the Company's litigation related to its securities losses previously discussed, it is possible that there could be a significant decrease to the total amount of unrecognized tax benefits over the next 12 months. However, as of December 31, 2017, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax positions over the next 12 months.