Lapse of statutes of limitations

[Table of Contents](#i8e6404ebd98d416daa7f88f48159b601_7)EDWARDS LIFESCIENCES CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17.    INCOME TAXES (Continued)A reconciliation of the United States federal statutory income tax rate to the Company's effective income tax rate is as follows (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | Years Ended December 31, |
|   | 2021 |  | 2020 |  | 2019 |
| Income tax expense at United States federal statutory rate | $ | 357.4  |  |  | $ | 192.5  |  |  | $ | 245.0  |  |
| Foreign income taxed at different rates | (122.2) |  |  | (80.5) |  |  | (75.0) |  |
| State and local taxes, net of federal tax benefit | 11.9  |  |  | 5.0  |  |  | 11.9  |  |
| Tax credits, federal and state | (48.4) |  |  | (43.1) |  |  | (42.9) |  |
| Build of reserve for prior years' uncertain tax positions | 3.6  |  |  | 4.2  |  |  | 5.0  |  |
|  |  |  |  |  |  |
| Tax on global intangible low-taxed income | 56.5  |  |  | 49.2  |  |  | 32.0  |  |
| Foreign-derived intangible income deduction | (1.3) |  |  | (2.6) |  |  | (7.2) |  |
| Contingent consideration liabilities | (26.1) |  |  | 2.9  |  |  | (1.3) |  |
| United States federal deductible employee share-based compensation | (47.8) |  |  | (48.3) |  |  | (57.6) |  |
| Nondeductible employee share-based compensation | 5.3  |  |  | 4.2  |  |  | 3.2  |  |
|  |  |  |  |  |  |
|  |  |  |  |  |  |
|  |  |  |  |  |  |
| Other | 10.0  |  |  | 9.8  |  |  | 6.5  |  |
| Income tax provision | $ | 198.9  |  |  | $ | 93.3  |  |  | $ | 119.6  |  |

  
The Company's effective tax rate for 2021 increased in comparison to 2020 primarily due to the tax benefit from the Settlement Agreement with Abbott in 2020 (see Note 3) and the decrease in the excess tax benefit from employee share-based compensation, partially offset by the tax benefit from the change in fair value of contingent consideration liabilities. The Company's effective tax rate for 2020 decreased slightly in comparison to 2019 primarily due to the tax benefit from the Settlement Agreement with Abbott in 2020, partially offset by the increase in the United States tax on global intangible low-taxed income and the decrease in the excess tax benefit from employee share-based compensation.  Uncertain Tax Positions  
As of December 31, 2021 and 2020, the gross uncertain tax positions were $358.4 million and $281.8 million, respectively. The Company estimates that these liabilities would be reduced by $135.1 million and $95.1 million, respectively, from offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes, and timing adjustments. The net amounts of $223.3 million and $186.7 million, respectively, if not required, would favorably affect the Company's effective tax rate.  
A reconciliation of the beginning and ending amount of uncertain tax positions, excluding interest, penalties, and foreign exchange, is as follows (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | December 31, |
|   | 2021 |  | 2020 |  | 2019 |
| Uncertain gross tax positions, January 1 | $ | 281.8  |  |  | $ | 203.1  |  |  | $ | 150.7  |  |
| Current year tax positions | 82.1  |  |  | 86.4  |  |  | 55.4  |  |
| Increase in prior year tax positions | 2.3  |  |  | 6.0  |  |  | 0.8  |  |
| Decrease in prior year tax positions | (4.8) |  |  | (10.0) |  |  | (3.8) |  |
| Settlements | (0.3) |  |  | (3.7) |  |  | —  |  |
| Lapse of statutes of limitations | (2.7) |  |  | —  |  |  | —  |  |
| Uncertain gross tax positions, December 31 | $ | 358.4  |  |  | $ | 281.8  |  |  | $ | 203.1  |  |

  
The table above summarizes the gross amounts of uncertain tax positions without regard to reduction in tax liabilities or additions to deferred tax assets and liabilities if such uncertain tax positions were settled.   
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