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Income Taxes | 12 Months Ended
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Nov. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The provision for income taxes for the years ended November 30 consists of the following:
(millions) | 2019 | 2018 | 2017
Income taxes |  |  |
Current |  |  |
Federal | $ | 52.3 |  | $ | 92.9 |  | $ | 67.1 |
State | 10.7 |  | 11.0 |  | 6.2 |
International | 73.5 |  | 78.7 |  | 53.9 |
| 136.5 |  | 182.6 |  | 127.2 |
Deferred |  |  |
Federal | 26.4 |  | (340.3 | ) | 23.8 |
State | 3.6 |  | 1.5 |  | 0.9 |
International | (9.1 | ) | (1.1 | ) | (0.6 | )
| 20.9 |  | (339.9 | ) | 24.1 |
Total income tax expense (benefit) | $ | 157.4 |  | $ | (157.3 | ) | $ | 151.3 |
In December 2017, President Trump signed into law Pub. L. 115-97, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (this legislation is referred to herein as the “U.S. Tax Act”). The U.S. Tax Act provides for significant changes in the U.S. Internal Revenue Code of 1986, as amended. Certain provisions of the U.S. Tax Act were effective during our fiscal year ended November 30, 2018 with all provisions of the U.S. Tax Act effective as of the beginning of our fiscal year beginning December 1, 2018. The U.S. Tax Act contains provisions with separate effective dates but is generally effective for taxable years beginning after December 31, 2017. The U.S. Tax Act creates a new requirement that certain income earned by foreign subsidiaries, known as Global Intangible Low-Taxed Income (GILTI), must be included in the gross income of the subsidiary’s U.S. shareholder. This provision of the U.S. Tax Act was effective for us for our fiscal year beginning December 1, 2018. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current period expense when incurred. We have elected to treat GILTI as a current period expense when incurred. Beginning on January 1, 2018, the U.S. Tax Act lowered the U.S. corporate income tax rate from 35% to 21% on our U.S. earnings from that date and beyond. The revaluation of our U.S. deferred tax assets and liabilities to the 21% corporate tax rate has reduced our net U.S. deferred income tax liability by $380.0 million and is reflected as a reduction in our income tax expense in our results for the year ended November 30, 2018. The U.S. Tax Act imposes a one-time transition tax on post-1986 earnings of non-U.S. affiliates that have not been repatriated for purposes of U.S. federal income tax, with those earnings taxed at rates of 15.5% for earnings reflected by cash and cash equivalent items and 8% for other assets. This transition tax, based on our fiscal 2018 tax return filed in fiscal 2019, was $76.0 million (we estimated the transition tax to be $75.3 million in fiscal 2018). The cash tax effects of the transition tax, reduced by the utilization of $21.1 million of current and carried forward excess foreign tax credits, as well as other items of $7.7 million, resulted in a net tax liability of $47.2 million, which can be remitted in installments over an eight-year period as we are doing. As of November 30, 2019, our remaining unpaid transition tax is $43.4 million. In addition to the estimated transition tax of $75.3 million recognized in 2018, we incurred additional foreign withholding taxes, net of a U.S. foreign tax credit, of $7.9 million and a $4.7 million reduction in our fiscal 2018 income taxes as a consequence of the transition tax, both of which we recognized as a component of our income tax expense for the year ended November 30, 2018, for a net transition tax impact recognized in 2018 of $78.5 million. In 2019, current federal income tax expense increased by $8.3 million from $44.0 million (exclusive of non-recurring U.S. Tax Act impacts of $48.9 million) in 2018 to $52.3 million in 2019. Deferred federal expense decreased by $2.6 million from $29.0 million (exclusive of non-recurring U.S. Tax Act impacts of $369.3 million) in 2018 to $26.4 million in 2019. The net change in current federal income tax expense principally stemmed from higher pretax income in the U.S. in 2019 compared to 2018. The components of income from consolidated operations before income taxes for the years ended November 30 follow:
(millions) | 2019 | 2018 | 2017
Pretax income |  |  |
United States | $ | 569.0 |  | $ | 492.2 |  | $ | 382.1 |
International | 250.2 |  | 249.1 |  | 212.7 |
| $ | 819.2 |  | $ | 741.3 |  | $ | 594.8 |
A reconciliation of the U.S. federal statutory rate with the effective tax rate for the years ended November 30 follows:
| 2019 | 2018 | 2017
Federal statutory tax rate | 21.0 | % | 22.2 | % | 35.0 | %
State income taxes, net of federal benefits | 1.6 |  | 1.5 |  | 0.8 |
International tax at different effective rates | 1.6 |  | 0.4 |  | (4.8 | )
U.S. tax on remitted and unremitted earnings | 0.5 |  | 0.6 |  | 0.4 |
Stock compensation expense | (2.8 | ) | (2.9 | ) | (1.6 | )
U.S. manufacturing deduction | — |  | (0.8 | ) | (1.8 | )
Changes in prior year tax contingencies | (0.3 | ) | (0.8 | ) | (2.1 | )
Non-recurring benefit of U.S. Tax Act | (0.2 | ) | (40.7 | ) | — |
Intra-entity asset transfer | (1.8 | ) | — |  | — |
Other, net | (0.4 | ) | (0.7 | ) | (0.5 | )
Total | 19.2 | % | (21.2 | )% | 25.4 | %
Deferred tax assets and liabilities are comprised of the following as of November 30:
(millions) | 2019 | 2018
Deferred tax assets |  |
Employee benefit liabilities | $ | 103.3 |  | $ | 82.7 |
Other accrued liabilities | 32.3 |  | 40.0 |
Inventory | 7.5 |  | 8.0 |
Tax loss and credit carryforwards | 46.8 |  | 57.2 |
Other | 48.1 |  | 44.2 |
Valuation allowance | (32.4 | ) | (32.9 | )
| 205.6 |  | 199.2 |
Deferred tax liabilities |  |
Depreciation | 82.6 |  | 77.8 |
Intangible assets | 770.5 |  | 782.8 |
Other | 5.5 |  | 5.3 |
| 858.6 |  | 865.9 |
Net deferred tax liability | $ | (653.0 | ) | $ | (666.7 | )
At November 30, 2019, our non-U.S. subsidiaries have tax loss carryforwards of $183.3 million. Of these carryforwards, $2.4 million expire in 2020, $6.1 million from 2021 through 2022, $59.3 million from 2023 through 2036 and $115.5 million may be carried forward indefinitely. At November 30, 2019, our non-U.S. subsidiaries have capital loss carryforwards of $26.0 million. All of these carryforwards may be carried forward indefinitely. A valuation allowance has been provided to record deferred tax assets at their net realizable value based on a more likely than not criteria. The $0.5 million net decrease in the valuation allowance from November 30, 2018 to November 30, 2019 mainly relates to subsidiaries' net operating losses, capital losses and other tax attributes which may not be realized in future periods. Historically, we have not provided deferred income taxes on the cumulative undistributed earnings of our international subsidiaries. During fiscal 2018, previously undistributed earnings of certain international subsidiaries were no longer considered indefinitely reinvested as of January 1, 2018; therefore, we recognized $7.9 million of income tax expense in fiscal 2018. Our intent is to continue to reinvest the remaining undistributed earnings of our international subsidiaries indefinitely. Therefore, in 2019 there were no incremental previously undistributed earnings that no longer met the requirements of indefinite reinvestment. While federal income tax expense has been recognized as a result of the U.S. Tax Act, we have not provided any additional deferred taxes with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss. It is not practicable for us to determine the amount of unrecognized tax expense on these reinvested international earnings. The following table summarizes the activity related to our gross unrecognized tax benefits for the years ended November 30:
(millions) | 2019 | 2018 | 2017
Balance at beginning of year | $ | 27.9 |  | $ | 39.1 |  | $ | 58.3 |
Additions for current year tax positions | 6.6 |  | 6.5 |  | 7.3 |
Additions for prior year tax positions | 0.6 |  | 0.3 |  | 0.9 |
Reductions for prior year tax positions | (0.3 | ) | (6.9 | ) | (8.4 | )
Settlements | — |  | — |  | (18.1 | )
Statute expirations | (2.5 | ) | (9.1 | ) | (2.1 | )
Foreign currency translation | (0.3 | ) | (2.0 | ) | 1.2 |
Balance at November 30 | $ | 32.0 |  | $ | 27.9 |  | $ | 39.1 |
As of November 30, 2019, if recognized, all of the $32.0 million of the unrecognized tax benefits would affect the effective rate. We record interest and penalties on income taxes in income tax expense. We recognized interest and penalty expense of $2.1 million, $0.1 million and $0.4 million in 2019, 2018 and 2017, respectively. As of November 30, 2019 and 2018, we had accrued $7.1 million and $5.1 million, respectively, of interest and penalties related to unrecognized tax benefits. Tax settlements or statute of limitation expirations could result in a change to our uncertain tax positions. We believe that the reasonably possible total amount of unrecognized tax benefits as of November 30, 2019 that could decrease in the next 12 months as a result of various statute expirations, audit closures and/or tax settlements would not be material. We file income tax returns in the U.S. federal jurisdiction and various state and non-U.S. jurisdictions. The open years subject to tax audits vary depending on the tax jurisdictions. In the U.S federal jurisdiction, we are no longer subject to income tax audits by taxing authorities for years before 2016. In other major jurisdictions, we are no longer subject to income tax audits by taxing authorities for years before 2012. We are under normal recurring tax audits in the U.S. and in several jurisdictions outside the U.S. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe that our reserves for uncertain tax positions are adequate to cover existing risks and exposures.

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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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