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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

Note 11. 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 2018 and state and local tax examinations before 2017. Significant components of the provision for income taxes attributable to continuing operations were as follows:

​

​	​	​	​	​	​	​	​	​
​	Year Ended December 31,
​	2021			2020			2019
​	(in millions)
Current:	​	​	​	​	​	​	​	​
Federal	$	362.9	​	$	77.6	​	$	136.3
State	​	98.0	​	​	24.9	​	​	37.9
Foreign	​	28.6	​	​	17.0	​	​	16.5
​	​	489.5	​	​	119.5	​	​	190.7
Deferred:	​	​	​	​	​	​	​	​
Federal	​	(20.2)	​	​	(7.1)	​	​	26.9
State	​	(4.0)	​	​	0.3	​	​	7.2
Foreign	​	0.4	​	​	(6.9)	​	​	(1.6)
​	​	(23.8)	​	​	(13.7)	​	​	32.5
​	$	465.7	​	$	105.8	​	$	223.2

​

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

​

​	​	​	​	​	​	​	​	​
​	Year Ended December 31,
​	2021			2020			2019
​	(in millions)
​	​	​	​	​	​	​	​	​
U.S.	$	1,778.5	​	$	465.9	​	$	877.4
International	​	104.6	​	​	12.3	​	​	51.9
Income before income taxes	$	1,883.1	​	$	478.2	​	$	929.3

​

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

​

​	​	​	​	​	​	​
​	Year Ended December 31,					​
​	2021		2020		2019	​
Income tax at U.S. federal statutory tax rate	21.0	%	21.0	%	21.0	%
State income tax, net of federal tax effect	3.8	​	3.6	​	3.6	​
Foreign earnings taxed at higher rates	0.4	​	1.0	​	0.4	​
Net effect of life insurance policies	(0.8)	​	(2.9)	​	(1.5)	​
Net effect of changes in unrecognized tax benefits	0.1	​	(0.3)	​	—	​
Stock-based compensation	0.3	​	0.8	​	0.7	​
Other, net	(0.1)	​	(1.1)	​	(0.2)	​
Effective tax rate	24.7	%	22.1	%	24.0	%

​

​

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

​

​	​	​	​	​	​
​	December 31,
​	2021			2020
​	(in millions)
Deferred tax assets:	​	​	​	​	​
Accrued expenses not currently deductible for tax	$	36.9	​	$	42.3
Inventory costs capitalized for tax purposes	​	12.9	​	​	9.0
Stock-based compensation	​	10.1	​	​	8.6
Allowance for doubtful accounts	​	6.6	​	​	4.8
Tax credits carryforwards	​	0.9	​	​	0.4
Net operating loss carryforwards	​	3.9	​	​	3.6
Total deferred tax assets	​	71.3	​	​	68.7
Deferred tax liabilities:	​	​	​	​	​
Property, plant and equipment, net	​	(183.1)	​	​	(190.2)
Goodwill and other intangible assets	​	(342.0)	​	​	(297.1)
LIFO inventories	​	(25.0)	​	​	(29.7)
Other	​	(6.0)	​	​	(7.3)
Total deferred tax liabilities	​	(556.1)	​	​	(524.3)
Net deferred tax liabilities	$	(484.8)	​	$	(455.6)

​

As of December 31, 2021, we had $4.2 million of state and $0.6 million of acquired federal net operating loss carryforwards (“NOLs”), which are available to offset future income taxes. The state NOLs expire in years 2022 through 2041. We believe that it is more likely than not that we will be able to realize these NOLs within their respective carryforward periods.

​

The Company believes it is more likely than not that it will generate sufficient future taxable income to realize its deferred tax assets.

​

Unrecognized Tax Benefits

​

We are under audit by various state jurisdictions for years 2017 through 2019, 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,
​	2021			2020			2019
​	(in millions)
Unrecognized tax benefits at January 1	$	1.0	​	$	2.2	​	$	2.4
Increases in tax positions for prior years	​	—	​	​	—	​	​	0.8
Increases in tax positions for current year	​	1.0	​	​	—	​	​	—
Settlements	​	—	​	​	(1.1)	​	​	(0.7)
Lapse of statute of limitations	​	(0.1)	​	​	(0.1)	​	​	(0.3)
Unrecognized tax benefits at December 31	$	1.9	​	$	1.0	​	$	2.2

​

As of December 31, 2021, $1.9 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 $0.7 million and $0.4 million as of December 31, 2021 and 2020, respectively. Although the timing, settlement or closure of audits is not certain, we do not anticipate our unrecognized tax benefits will increase or decrease significantly over the next twelve months.

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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.

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