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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2021
Components of Income Tax Expense | The components of income tax expense from our wholly owned operations and investments and our controlling interest in CIAC and joint ventures with Carrier are as follows:
Years Ended December 31, |  | 2021 |  |  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 91,162 |  |  | $ | 58,895 |  |  | $ | 48,359 |
State |  |  | 20,703 |  |  |  | 12,909 |  |  |  | 9,362 |
Foreign |  |  | 10,993 |  |  |  | 4,779 |  |  |  | 8,078 |
|  |  | 122,858 |  |  |  | 76,583 |  |  |  | 65,799 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | 6,434 |  |  |  | 218 |  |  |  | 2,603 |
State |  |  | 1,374 |  |  |  | 21 |  |  |  | 446 |
Foreign |  |  | (1,869 | ) |  |  | (199 | ) |  |  | (1,771 | )
|  |  | 5,939 |  |  |  | 40 |  |  |  | 1,278 |
Income tax expense |  | $ | 128,797 |  |  | $ | 76,623 |  |  | $ | 67,077 |
Reconciliation of Effective Income Tax Rate | Following is a reconciliation of the effective income tax rate:
Years Ended December 31, |  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal benefit and other |  |  | 3.5 |  |  |  | 3.3 |  |  |  | 2.8 |
Excess tax benefits from share-based compensation |  |  | (1.7 | ) |  |  | (2.1 | ) |  |  | (1.8 | )
Tax effects on foreign income |  |  | 0.4 |  |  |  | 0.3 |  |  |  | 0.5 |
GILTI |  |  | — |  |  |  | — |  |  |  | (0.1 | )
FDII |  |  | (0.1 | ) |  |  | — |  |  |  | — |
Change in valuation allowance |  |  | 0.8 |  |  |  | — |  |  |  | — |
Tax credits and other |  |  | (0.5 | ) |  |  | (0.5 | ) |  |  | (1.2 | )
Effective income tax rate attributable to Watsco, Inc. |  |  | 23.4 |  |  |  | 22.0 |  |  |  | 21.2 |
Taxes attributable to non-controlling interest |  |  | (2.9 | ) |  |  | (2.8 | ) |  |  | (2.7 | )
Effective income tax rate |  |  | 20.5 | % |  |  | 19.2 | % |  |  | 18.5 | %
Significant Components of Net Deferred Tax Liabilities | The following is a summary of the significant components of our net deferred tax liabilities:
December 31, |  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Share-based compensation |  | $ | 30,854 |  |  | $ | 27,223 |
Capitalized inventory costs and inventory adj u stments |  |  | 3,449 |  |  |  | 3,189 |
Allowance for doubtful accounts |  |  | 1,328 |  |  |  | 949 |
Self-insurance reserves |  |  | 1,027 |  |  |  | 518 |
Other |  |  | 6,081 |  |  |  | 5,090 |
Net operating loss carryforwards |  |  | 3,959 |  |  |  | 2,930 |
|  |  | 46,698 |  |  |  | 39,899 |
Valuation allowanc e |  |  | (5,107 | ) |  |  | (668 | )
Total deferred tax assets |  |  | 41,591 |  |  |  | 39,231 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Deductible goodwill |  |  | (82,704 | ) |  |  | (78,288 | )
Depreciation |  |  | (18,744 | ) |  |  | (16,441 | )
Other |  |  | (8,794 | ) |  |  | (7,050 | )
Total deferred tax liabilities |  |  | (110,242 | ) |  |  | (101,779 | )
Net deferred tax liabilities (1) |  | $ | (68,651 | ) |  | $ | (62,548 | )
(1) | Net deferred tax liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.
Changes in Gross Unrecognized Tax Benefits | The changes in gross unrecognized tax benefits were as follows:
Balance at December 31, 2018 |  | $ | 4,902 |
Additions based on tax positions related to the current year |  |  | 1,027 |
Reductions due to lapse of applicable statute of limitations |  |  | (562 | )
Balance at December 31, 2019 |  |  | 5,367 |
Additions based on tax positions related to the current year |  |  | 1,911 |
Reductions due to lapse of applicable statute of limitations |  |  | (773 | )
Balance at December 31, 2020 |  |  | 6,505 |
Additions based on tax positions related to the current year |  |  | 1,143 |
Reductions due to lapse of applicable statute of limitations |  |  | (921 | )
Balance at December 31, 2021 |  | $ | 6,727 |

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