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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 19. Income Taxes Components of earnings before income taxes and noncontrolling interests are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
United States |  | $ | 1,215,909 |  |  | $ | 1,806,704 |  |  | $ | 3,160,111 |
Foreign |  |  | (380,371 | ) |  |  | (23,897 | ) |  |  | 69,280 |
|  | $ | 835,538 |  |  | $ | 1,782,807 |  |  | $ | 3,229,391 |
The provision for income taxes consists of the following (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (177,159 | ) |  | $ | 241,074 |  |  | $ | 633,868 |
State |  |  | (4,298 | ) |  |  | 62,685 |  |  |  | 96,622 |
Foreign |  |  | 18,131 |  |  |  | 8,981 |  |  |  | 14,800 |
Total current |  |  | (163,326 | ) |  |  | 312,740 |  |  |  | 745,290 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 177,035 |  |  |  | 101,946 |  |  |  | 4,953 |
State |  |  | (25,500 | ) |  |  | 8,013 |  |  |  | 6,847 |
Foreign |  |  | 11,301 |  |  |  | (10,802 | ) |  |  | (8,783 | )
Total deferred |  |  | 162,836 |  |  |  | 99,157 |  |  |  | 3,017 |
Total provision for income taxes |  | $ | (490 | ) |  | $ | 411,897 |  |  | $ | 748,307 |
A reconciliation of the federal statutory tax rate (21%) to the total provision is as follows:
|  | Year Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Taxes computed at statutory rate |  | 21.00% |  | 21.00% |  | 21.00%
State income taxes, net of federal income tax benefit |  | -3.36% |  | 3.16% |  | 2.52%
Federal research credit |  | -0.79% |  | -0.34% |  | -0.14%
Equity in losses of foreign joint venture |  | 0.64% |  | 0.19% |  | 0.08%
Impairment on investment in foreign joint venture |  | 11.20% |  | — |  | —
Tax loss on investment in foreign joint venture |  | -22.73% |  | — |  | —
Foreign rate differential |  | 1.15% |  | — |  | -0.07%
Noncontrolling interests |  | -2.88% |  | -1.18% |  | -0.78%
Tax Reform Act |  | — |  | — |  | 0.18%
CARES Act NOL carryback |  | -5.77% |  | — |  | —
Other, net |  | 1.49% |  | 0.27% |  | 0.38%
Provision for income taxes |  | -0.06% |  | 23.10% |  | 23.17%
For the year ended December 31, 2020, the effective tax rate on continuing operations decreased 23.16% versus the prior year to -0.06%. The decrease in the effective tax rate was primarily due to a net tax benefit of $201.9 million (-24.16%) for a tax loss on our investment in Duferdofin Nucor, a net tax benefit of $45.2 million (-5.41%, included in the State income taxes, net of federal income tax benefit line) for state tax credits, and a federal tax benefit of $48.2 million (-5.77%, included in the CARES Act NOL carryback line) for the carryback of a federal tax net operating loss (an “NOL”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). These benefits were all recognized in 2020 and were somewhat offset by the rate impact (11.2%) of financial statement impairments of $445.6 million which did not affect the provision for income taxes. The total benefit for the tax loss on our investment in Duferdofin Nucor is reflected on the Tax loss on investment in foreign joint venture line (-22.73%) and the State income taxes, net of federal income tax benefit line (-1.43%). The CARES Act allows for an NOL generated in 2020 to be carried back to taxable years where the federal income tax rate was 35%. The difference in the tax rate in 2020 and tax years before the enactment of the Tax Cuts and Jobs Act of 2017 is the main driver of the federal tax NOL benefit in 2020, but this is somewhat offset by the partial loss of the domestic manufacturing deduction in the carryback year. The 2018 effective tax rate included the write-off of $21.3 million (0.66%, included in the Other, net line for 2018) of deferred tax assets due to the change in the tax status of a subsidiary in 2018. Deferred tax assets and liabilities resulted from the following (in thousands):
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued liabilities and reserves |  | $ | 171,998 |  |  | $ | 146,658 |
Allowance for doubtful accounts |  |  | 16,434 |  |  |  | 18,479 |
Inventory |  |  | 62,755 |  |  |  | 79,363 |
Post-retirement benefits |  |  | 12,714 |  |  |  | 10,288 |
Commodity hedges |  |  | 4,033 |  |  |  | 5,164 |
Net operating loss carryforward |  |  | 63,952 |  |  |  | 59,083 |
Tax credit carryforwards |  |  | 187,267 |  |  |  | 164,132 |
Other deferred tax assets |  |  | 10,674 |  |  |  | 8,508 |
Valuation allowance |  |  | (207,653 | ) |  |  | (192,295 | )
Total deferred tax assets |  |  | 322,174 |  |  |  | 299,380 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Holdbacks and amounts not due under contracts |  |  | (14,051 | ) |  |  | (12,930 | )
Intangibles |  |  | (177,061 | ) |  |  | (171,531 | )
Property, plant and equipment |  |  | (680,688 | ) |  |  | (545,890 | )
Book/Tax differences on debt modifications |  |  | (46,813 | ) |  |  | - |
Total deferred tax liabilities |  |  | (918,613 | ) |  |  | (730,351 | )
Total net deferred tax liabilities |  | $ | (596,439 | ) |  | $ | (430,971 | )
Non-current deferred tax liabilities included in deferred credits and other liabilities in the consolidated balance sheets were $596.4 million at December 31, 2020 ($431.0 million at December 31, 2019). Current federal and state income taxes receivable included in other current assets in the consolidated balance sheets were $456.1 million at December 31, 2020 ($240.8 million at December 31, 2019). Nucor paid $50.3 million in net federal, state and foreign income taxes in 2020 ($525.2 million and $561.1 million in 2019 and 2018, respectively). Nucor has not recognized deferred tax liabilities on its investment in foreign subsidiaries with undistributed earnings that satisfy the permanent reinvestment requirements (the deferred tax liabilities on the investments not permanently reinvested are immaterial). While Nucor considers future earnings to be permanently reinvested, it is expected that potential future distributions will likely be of a nontaxable manner. If this assertion of permanent reinvestment were to change, there may be deferred tax liabilities related to the withholding tax impacts on the actual distribution of certain cumulative undistributed foreign earnings, but the Company believes this amount to be immaterial. State NOL carryforwards were $1.41 billion at December 31, 2020 ($681.8 million at December 31, 2019). If unused, they will expire between 2021 and 2040. Foreign NOL carryforwards were $142.3 million at December 31, 2020 ($149.8 million at December 31, 2019). If unused, the foreign NOL carryforwards will expire between 2021 and 2040. At December 31, 2020, Nucor had approximately $48.0 million of unrecognized tax benefits, of which $47.3 million would affect Nucor's effective tax rate, if recognized. At December 31, 2019, Nucor had approximately $50.9 million of unrecognized tax benefits, of which $50.2 million would affect Nucor's effective tax rate, if recognized. A reconciliation of the beginning and ending amounts of unrecognized tax benefits recorded in deferred credits and other liabilities in the consolidated balance sheets is as follows (in thousands):
|  | December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Balance at beginning of year |  | $ | 50,920 |  |  | $ | 48,605 |  |  | $ | 48,845 |
Additions based on tax positions related to current year |  |  | 4,138 |  |  |  | 9,272 |  |  |  | 16,424 |
Reductions based on tax positions related to current year |  |  | — |  |  |  | — |  |  |  | — |
Additions based on tax positions related to prior years |  |  | 223 |  |  |  | 2,106 |  |  |  | 199 |
Reductions based on tax positions related to prior years |  |  | — |  |  |  | (2,863 | ) |  |  | (8,198 | )
Reductions due to settlements with taxing authorities |  |  | — |  |  |  | (1,514 | ) |  |  | (2,160 | )
Reductions due to statute of limitations lapse |  |  | (7,316 | ) |  |  | (4,686 | ) |  |  | (6,505 | )
Balance at end of year |  | $ | 47,965 |  |  | $ | 50,920 |  |  | $ | 48,605 |
We estimate that in the next 12 months, our gross uncertain tax positions, exclusive of interest, could decrease by as much as $7.3 million, as a result of the expiration of the applicable statute of limitations. During 2020, Nucor recognized $0.1 million of expense in interest and penalties ($0.7 million of expense in 2019 and $4.0 million of benefit in 2018). The interest and penalties are included in interest expense, net and marketing, administrative and other expenses, respectively, in the consolidated statements of earnings. As of December 31, 2020, Nucor had approximately $12.0 million of accrued interest and penalties related to uncertain tax positions (approximately $11.9 million at December 31, 2019). The accrued interest and penalties are included in accrued expenses and other current liabilities and deferred credits and other liabilities, respectively, in the consolidated balance sheets. Nucor has concluded U.S. federal income tax matters for tax years through 2014 and for tax year 2016. The tax years 2015 and 2017 through 2019 remain open to examination by the Internal Revenue Service. The 2015 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 2014 through 2019 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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