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Income Taxes | 12 Months Ended
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Nov. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consisted of the following:
| Years Ended November 30,
(In thousands) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 924,474 |  |  | 428,907 |  |  | 298,701 |
State | 245,941 |  |  | 135,246 |  |  | 53,400 |
| $ | 1,170,415 |  |  | 564,153 |  |  | 352,101 |
Deferred: |  |  |  |  |
Federal | $ | 149,349 |  |  | 59,065 |  |  | 165,080 |
State | 42,745 |  |  | 33,017 |  |  | 74,992 |
| 192,094 |  |  | 92,082 |  |  | 240,072 |
| $ | 1,362,509 |  |  | 656,235 |  |  | 592,173 |
A reconciliation of the statutory rate and the effective tax rate was as follows:
| Percentage of Pretax Income
| 2021 |  | 2020 |  | 2019
Statutory rate | 21.00 | % |  | 21.00 | % |  | 21.00 | %
State income taxes, net of federal income tax benefit | 4.03 |  |  | 4.00 |  |  | 4.17 |
Tax credits (1) | (1.73) |  |  | (4.46) |  |  | (1.49) |
Nondeductible compensation | 0.49 |  |  | 0.57 |  |  | 0.45 |
Tax reserves and interest expense, net | 0.03 |  |  | — |  |  | (0.03) |
Deferred tax asset valuation allowance, net | (0.01) |  |  | — |  |  | (0.02) |
Other | (0.29) |  |  | (0.09) |  |  | 0.18 |
Effective rate | 23.52 | % |  | 21.02 | % |  | 24.26 | %
(1)During fiscal year 2020, Congress extended the new energy efficient home tax credit for homes delivered from 2018 to 2021, with retroactive effect for 2018 and 2019. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant temporary differences that give rise to the net deferred tax assets were as follows:
| November 30,
(In thousands) | 2021 |  | 2020
Deferred tax assets: |  |  |
Inventory valuation adjustments | $ | 94,624 |  |  | 136,868 |
Reserves and accruals | 187,466 |  |  | 161,984 |
Net operating loss carryforwards | 74,902 |  |  | 88,021 |
Capitalized expenses | 174,405 |  |  | 130,910 |
Investments in unconsolidated entities | 48,913 |  |  | 67,405 |
Employee stock incentive plan | 37,813 |  |  | 25,060 |
Other assets | 49,828 |  |  | 51,655 |
Total deferred tax assets | 667,951 |  |  | 661,903 |
Valuation allowance | (2,693) |  |  | (4,411) |
Total deferred tax assets after valuation allowance | 665,258 |  |  | 657,492 |
Deferred tax liabilities: |  |  |
Capitalized expenses | 187,332 |  |  | 181,729 |
Deferred income | 272,827 |  |  | 240,903 |
Unrealized gains on investments in equity securities | 164,534 |  |  | — |
Other liabilities | 44,810 |  |  | 47,478 |
Total deferred tax liabilities | 669,503 |  |  | 470,110 |
Net deferred tax assets (liabilities) | $ | (4,245) |  |  | 187,382 |
The detail of the Company's net deferred tax assets (liabilities) was as follows:
| November 30,
(In thousands) | 2021 |  | 2020
Net deferred tax assets (liabilities): (1) |  |  |
Homebuilding | $ | 84,198 |  |  | 119,467 |
Financial Services | (1,431) |  |  | 1,024 |
Multifamily | 64,247 |  |  | 38,155 |
Lennar Other | (151,259) |  |  | 28,736 |
Net deferred tax assets (liabilities) | $ | (4,245) |  |  | 187,382 |
(1)Net deferred tax assets and net deferred tax liabilities detailed above are included within other assets and other liabilities in the respective segments. A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed each reporting period by the Company based on the consideration of all available positive and negative evidence using a "more-likely-than-not" standard with respect to whether deferred tax assets will be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, actual earnings, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with loss carryforwards not expiring unused and tax planning alternatives.
| November 30,
(In thousands) | 2021 |  | 2020
Valuation allowance (1) | $ | (2,693) |  |  | (4,411) |
Federal tax effected NOL carryforwards (2) | 32,968 |  |  | 36,264 |
State tax effected NOL carryforwards (3) | 41,935 |  |  | 51,757 |
(1)As of November 30, 2021 and 2020, the deferred tax assets included valuation allowances primarily related to state net operating loss ("NOL") carryforwards that are not more likely than not to be utilized due to an inability to carry back these losses in most states and short carryforward periods that exist in certain states. (2)At November 30, 2021 and 2020, the Company had federal tax effected NOL carryforwards that may be carried forward to offset future taxable income and begin to expire in 2029. (3)At November 30, 2021 and 2020, the Company had state tax effected NOL carryforwards that may be carried forward from 10 to 20 years or indefinitely, depending on the tax jurisdiction, with certain losses expiring between 2022 and 2039. The following table summarizes the changes in gross unrecognized tax benefits:
| Years Ended November 30,
(In thousands) | 2021 |  | 2020 |  | 2019
Gross unrecognized tax benefits, beginning of year | $ | 12,285 |  |  | 12,856 |  |  | 14,667 |
Lapse of statute of limitations | — |  |  | (349) |  |  | (1,811) |
Decreases due to settlements with tax authorities | — |  |  | (222) |  |  | — |
Gross unrecognized tax benefits, end of year | $ | 12,285 |  |  | 12,285 |  |  | 12,856 |
If the Company were to recognize its gross unrecognized tax benefits as of November 30, 2021, $9.7 million would affect the Company’s effective tax rate. The Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease by up to $12.3 million within the following twelve months. The following summarizes the changes in interest and penalties accrued with respect to gross unrecognized tax benefits:
| November 30,
(In thousands) | 2021 |  | 2020
Accrued interest and penalties, beginning of the year | $ | 57,764 |  |  | 55,333 |
Accrual of interest and penalties (primarily related to state audits) | 2,173 |  |  | 2,802 |
Reduction of interest and penalties | — |  |  | (371) |
Accrued interest and penalties, end of the year | $ | 59,937 |  |  | 57,764 |
The IRS is currently examining the Company's federal tax income tax returns for fiscal year 2020, and certain state taxing authorities are examining various fiscal years. The final outcome of these examinations is not yet determinable. The statute of limitations for the Company's major tax jurisdictions remains open for examination for fiscal year 2005 and subsequent years. The Company participates in an IRS examination program, Compliance Assurance Process, "CAP". This program operates as a contemporaneous exam throughout the year in order to keep exam cycles current and achieve a higher level of compliance.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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