Note 9. Income Taxes

Reliance and its subsidiaries file numerous consolidated and separate income tax returns in the United States federal jurisdiction and in many state and foreign jurisdictions. We are no longer subject to U.S. federal tax examinations for years before 2009 or state and local examinations before 2007.

Significant components of the provision for income taxes attributable to continuing operations are as follows:

	Year Ended December 31,

	2013		2012			2011
	(in millions)
Current:
Federal	$	121.4	$	159.1		$	153.1
State		19.1		26.5			22.1
Foreign		10.0		12.7			14.4


		150.5		198.3			189.6
Deferred:
Federal		1.5		2.5			(24.1	)
State		1.5		0.5			(2.3	)
Foreign		0.1		(0.2	)		(0.8	)


		3.1		2.8			(27.2	)


	$	153.6	$	201.1		$	162.4

Components of U.S. and international income before income taxes were as follows:

	Year Ended December 31,

	2013		2012		2011
	(in millions)
U.S.	$	438.4	$	551.6	$	452.0
International		39.9		57.8		59.6


Income before income taxes	$	478.3	$	609.4	$	511.6

The reconciliation of income tax at the U.S. federal statutory tax rates to income tax expense is as follows:

	Year Ended December 31,

	2013			2012			2011
Income tax at U.S. federal statutory tax rate		35.0	%		35.0	%		35.0	%
State income tax, net of federal tax effect		2.9			2.9			2.4
Net effect of life insurance policies		(3.2	)		(2.2	)		(2.3	)
Net effect of changes in unrecognized tax benefits		(0.5	)		—			—
Domestic production activity deduction		(1.1	)		(1.2	)		(1.5	)
Other, net		(1.0	)		(1.5	)		(1.9	)


Effective tax rate		32.1	%		33.0	%		31.7	%

Significant components of our deferred tax assets and liabilities are as follows:

	December 31,

	2013			2012
	(in millions)
Deferred tax assets:
Accrued expenses not currently deductible for tax	$	77.7		$	66.9
Inventory costs capitalized for tax purposes		28.4			25.8
Share-based compensation		19.5			21.1
Allowance for doubtful accounts		6.9			7.8
Tax credits carryforwards		1.3			1.1
Net operating loss carryforwards		10.2			3.4
Other		1.9			3.5


Total deferred tax assets		145.9			129.6
Deferred tax liabilities:
Property, plant and equipment, net		(257.6	)		(165.9	)
Goodwill and other intangible assets		(465.2	)		(360.9	)
LIFO inventories		(49.2	)		(38.6	)
Deferred income		(25.8	)		—


Total deferred tax liabilities		(797.8	)		(565.4	)


Net deferred tax liabilities	$	(651.9	)	$	(435.8	)

As of December 31, 2013, we had available federal and state net operating loss carryforwards ("NOL") of $22.4 million and $3.5 million, respectively, to offset future income taxes, expiring in years 2014 through 2033. The federal NOL was assumed in our acquisition of Metals USA and is subject to an annual limitation amount. We believe that it is more likely than not that we will be able to realize these NOL's within their respective carryforward periods.

Taxes on Foreign Income

As of December 31, 2013, unremitted earnings of subsidiaries outside of the United States were approximately $202.8 million on which no United States taxes had been provided. Our intention is to indefinitely reinvest these earnings outside the United States. It is not practicable to estimate the amount of additional taxes that might be payable upon repatriation of foreign earnings.

Unrecognized Tax Benefits

We are under audit by various state jurisdictions but do not anticipate any material adjustments from these examinations. Reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:

	Year Ended December 31,

	2013			2012			2011
	(in millions)
Unrecognized tax benefits at January 1	$	15.9		$	16.1		$	15.4
Assumed in acquisition		5.0			—			—
Increases in tax positions for prior years		1.1			0.6			1.3
Decreases in tax positions for prior years		(2.1	)		—			(0.2	)
Increases in tax positions for current year		3.6			4.1			3.7
Settlements		(3.5	)		(1.1	)		(0.1	)
Lapses in statutes-of-limitation periods		(0.6	)		(3.8	)		(4.0	)


Unrecognized tax benefits at December 31	$	19.4		$	15.9		$	16.1

As of December 31, 2013, $19.4 million of unrecognized tax benefits would impact the effective tax rate if recognized. Accrued interest and penalties, net of applicable tax effect, related to uncertain tax positions were approximately $1.0 million and $0.9 million as of December 31, 2013 and 2012, respectively.