Entity information:
Income Taxes:
Domestic and foreign income from continuing operations before income taxes was as follows:

2017

2016

2015
U.S.
$
669.9


$
626.6


$
573.3

Foreign

21.1



27.1



110.8

Total income from continuing operations
$
691.0


$
653.7


$
684.1


The components of the provision for income taxes from continuing operations for the years ended December 31 were as follows:

2017

2016

2015
Current:








Federal
$
176.6


$
171.7


$
168.8

State and local

23.4



24.0



23.9

Foreign
 
9.5

 
 
3.6

 
 
3.3

Total current provision for income taxes

209.5



199.3



196.0

Deferred:








Federal

(66.3
)


29.4



23.4

State and local

5.7



4.9



1.4

Foreign
 
(13.0
)
 
 
(31.4
)
 
 
(24.2
)
Total deferred provision for income taxes

(73.6
)


2.9



0.6

Provision for income taxes
$
135.9


$
202.2


$
196.6


On December 22, 2017, President Trump signed comprehensive tax legislation commonly referred to as the Tax Cuts and Job Act ("Tax Act"). The Tax Act makes complex changes to the tax law which will impact the 2017 year, including but not limited to 1) a re-measurement of deferred tax assets and liabilities as a result of the corporate tax rate change from 35.0% to 21.0%, 2) 100% bonus depreciation on qualifying property placed in service after September 27, 2017, and 3) requiring a one-time repatriation tax on foreign earnings.
Based on the initial analysis of the Tax Act, the Company has made reasonable estimates of its 2017 impact and has recorded provisional adjustments as follows:
1)
Due to the federal corporate rate reduction, a re-measurement of deferred tax assets and liabilities resulted in the recording of a benefit of approximately $89.1 million.
2)
100% bonus depreciation on qualifying assets resulted in an estimated decrease to the current income tax payable of approximately $8.0 million.
3)
The Company is not expected to be impacted by the one-time repatriation tax on foreign earnings.
The Tax Act will also affect 2018 and forward, including but not limited to 1) a reduction in the federal corporate rate from 35.0% to 21.0%, 2) elimination of the corporate alternative minimum tax, 3) creation of a new minimum tax - the base erosion anti-abuse tax ("BEAT"), 4) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, 5) a new provision designed to tax global intangible low-taxed income ("GILTI"), 6) a new limitation on deductible interest expense, 7) the repeal of Section 199 domestic production activity deduction, 8) a new limitation on the deductibility of certain executive compensation, 9) limitations on net operating losses ("NOL’s") generated after December 31, 2017, 10) a special deduction for Foreign Derived Intangible Income ("FDII") and various other items.  The Company has evaluated the above provisions and other than the reduction in corporate tax rate, it does not believe that the new provisions will have a material impact on the provision for income taxes.

The reconciliation between the Company’s effective tax rate on income from continuing operations and the statutory tax rate is as follows for the years ended December 31:
 
2017
 
2016
 
2015
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State and local taxes, net of federal tax benefit
2.6
 %
 
2.7
 %
 
2.6
 %
Foreign tax differentials
(2.1
)%
 
(4.7
)%
 
(6.8
)%
Federal Tax Reform-deferred rate change
(12.9
)%
 
—
 %
 
—
 %
U.K. legislative change
—
 %
 
(1.0
)%
 
(2.1
)%
Stock-based compensation
(2.5
)%
 
—
 %
 
—
 %
Other
(0.4
)%
 
(1.1
)%
 
—
 %
Effective tax rate for continuing operations
19.7
 %
 
30.9
 %
 
28.7
 %

The decrease in the effective tax rate in 2017 compared to 2016 was primarily due to lowered federal income tax rates as a result of U.S. Tax Reform and the adoption of ASU No. 2016-09, partially offset by legislation enacted in the U.K.
The tax effects of significant items comprising the Company’s deferred tax assets as of December 31 are as follows:

2017

2016
Deferred income tax asset:





Employee wages, pension and other benefits
$
15.5


$
30.1

Deferred rent

3.8



6.3

Net operating loss carryover

36.4



24.3

Capital and other unrealized losses

2.1



3.5

Interest expense
 
9.1

 
 
—

Other

8.2



12.3

Total

75.1



76.5

Less valuation allowance

(17.6
)


(8.1
)
Deferred income tax asset

57.5



68.4

Deferred income tax liability:





Fixed assets and intangible assets

(366.2
)


(355.2
)
Other

(13.2
)


(19.8
)
Deferred income tax liability

(379.4
)


(375.0
)
Deferred income tax liability, net
$
(321.9
)

$
(306.6
)

The net deferred income liability of $321.9 million consists primarily of timing differences involving depreciation and amortization.
The ultimate realization of the deferred tax assets depends on the Company’s ability to generate sufficient taxable income in the future. The Company has provided a valuation allowance against the deferred tax assets associated with the interest expense deduction limitation in the U.K. The Company has also provided for a valuation allowance against the deferred tax assets associated with the net operating losses of certain subsidiaries. The Company’s net operating loss carryforwards expire as follows:
Years
Amount
2018-2025
$
1.9

2026-2030

3.8

2031-2037

205.8

Total
$
211.5


A valuation allowance has been established based on the Company’s evaluation of the likelihood of utilizing these benefits before they expire. The Company has determined that the generation of future taxable income from certain subsidiaries to fully realize the deferred tax assets is uncertain. Other than these items, the Company has determined, based on the Company’s historical operating performance, that taxable income of the Company will more likely than not be sufficient to fully realize the deferred tax assets.

As of December 31, 2017, the Company has not made a provision for U.S. or additional foreign withholdings taxes for any additional outside basis difference inherent in its foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. The Company does not rely on these unremitted earnings as a source of funds for its domestic business as it expects to have sufficient cash flow in the U.S. to fund its U.S. operational and strategic needs.
The Company follows ASC No. 740-10, which prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. For each tax position, the Company must determine whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is then measured to determine the amount of benefit to recognize within the financial statements. No benefits may be recognized for tax positions that do not meet the more likely than not threshold. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

2017

2016

2015
Unrecognized tax benefit as of January 1
$
16.8


$
14.5


$
10.6

Gross increase in tax positions in prior period

1.7



2.5



7.1

Gross decrease in tax positions in prior period

(1.2
)


(0.4
)


(2.6
)
Gross increase in tax positions in current period

—



6.4



—

Settlements

—



(5.3
)


(0.3
)
Lapse of statute of limitations

(1.0
)


(0.9
)


(0.3
)
Unrecognized tax benefit as of December 31
$
16.3


$
16.8


$
14.5


Of the total unrecognized tax benefits as of December 31, 2017, 2016 and 2015, $13.2 million, $13.8 million and $11.4 million, respectively, represent the amounts that, if recognized, would have a favorable effect on the Company’s effective tax rate in any future periods.
The total gross amount of accrued interest and penalties for the years ended December 31, 2017, 2016 and 2015 was $4.5 million, $3.4 million and $2.8 million, respectively. The Company’s practice is to recognize interest and penalties associated with income taxes as a component of “Provision for income taxes” in the accompanying consolidated statements of operations.
The Company does not expect a significant increase in unrecognized benefits related to federal, foreign, or state tax exposures within the coming year. In addition, the Company believes that it is reasonably possible that approximately $0.5 million of its currently remaining unrecognized tax positions, each of which is individually insignificant, may be recognized by the end of 2018 as a result of a combination of audit settlements and lapses of statute of limitations, net of additional uncertain tax positions.

The Company is subject to tax in the U.S. and in various state and foreign jurisdictions. The Company joined by its domestic subsidiaries, files a consolidated income tax return for the Federal income tax purposes. With few exceptions, none of which are material to the Company’s consolidated financial statements as of December 31, 2017, the Company is no longer subject to U.S. federal, state, and local or non-US income tax examinations by tax authorities for tax years before 2013. The Internal Revenue Service is conducting an audit of Wood Mackenzie, Inc. for the period January 1, 2014 through May 19, 2015, as well as Verisk Analytics, Inc. & Subsidiaries for tax year ended December 31, 2014.  In New Jersey, the Company is being audited for the years ended December 31, 2011 through 2014 with a statute extension until March 31, 2018. The Company is also under audit in Illinois for the year ended December 31, 2014. The Company does not expect that the results of these examinations will have a material effect on its financial position, results of operations or cash flow.