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Income Taxes | 12 Months Ended
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Aug. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes We account for income taxes using the asset and liability approach as prescribed by ASC Topic 740, Income Taxes (“ASC 740”). This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Using the enacted tax rates in effect for the year in which the differences are expected to reverse, deferred tax liabilities and assets are determined based on the differences between the financial reporting and the tax basis of an asset or liability. On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States. Among other provisions, the IRA includes a 15% corporate alternative minimum tax rate applicable for our fiscal 2024 taxable year and a 1% federal excise tax on corporate stock repurchases made after December 31, 2022. We do not expect the IRA to have a material impact on our financial condition, results of operations, or cash flows. The provision for income taxes consists of the following components during the periods presented (in millions):
| Year Ended August 31,
| 2022 |  | 2021 |  | 2020
Provision for current federal taxes | $ | 67.6 |  |  | $ | 65.4 |  |  | $ | 54.6 |
Provision for current state taxes | 16.3 |  |  | 12.8 |  |  | 12.5 |
Provision for current foreign taxes | 25.4 |  |  | 14.4 |  |  | 16.0 |
Provision for (benefit from) deferred taxes | 0.6 |  |  | (2.7) |  |  | (6.7) |
Total provision for income taxes | $ | 109.9 |  |  | $ | 89.9 |  |  | $ | 76.4 |
The following table reconciles the provision at the federal statutory rate to the total provision for income taxes during the periods presented (in millions):
| Year Ended August 31,
| 2022 |  | 2021 |  | 2020
Federal income tax computed at statutory rate | $ | 103.7 |  |  | $ | 83.2 |  |  | $ | 68.2 |
State income tax, net of federal income tax benefit | 13.5 |  |  | 10.7 |  |  | 9.7 |
Federal permanent differences | (4.3) |  |  | 0.6 |  |  | 0.9 |
Foreign permanent differences and rate differential | 4.3 |  |  | 2.4 |  |  | 2.4 |
Research and development tax credits | (7.6) |  |  | (7.6) |  |  | (7.1) |
Unrecognized tax benefits | 2.1 |  |  | 0.7 |  |  | 1.8 |
Other, net | (1.8) |  |  | (0.1) |  |  | 0.5 |
Total provision for income taxes | $ | 109.9 |  |  | $ | 89.9 |  |  | $ | 76.4 |
Components of the net deferred income tax liabilities as of the dates presented include (in millions):
| August 31,
| 2022 |  | 2021
Deferred income tax liabilities: |  |  |
Depreciation | $ | (18.6) |  |  | $ | (19.0) |
Goodwill and intangibles | (154.2) |  |  | (155.2) |
Operating lease right of use asset | (18.3) |  |  | (14.3) |
Other liabilities | (7.4) |  |  | (8.2) |
Total deferred income tax liabilities | (198.5) |  |  | (196.7) |
Deferred income tax assets: |  |  |
Self-insurance | 1.6 |  |  | 1.8 |
Pension | 7.1 |  |  | 9.9 |
Deferred compensation | 22.2 |  |  | 21.3 |
Net operating losses | 5.8 |  |  | 5.4 |
Other accruals not yet deductible | 42.9 |  |  | 41.3 |
Operating lease liabilities | 20.3 |  |  | 15.4 |
Other assets | 9.3 |  |  | 12.0 |
Total deferred income tax assets | 109.2 |  |  | 107.1 |
Valuation allowance | (11.5) |  |  | (9.5) |
Net deferred income tax liabilities | $ | (100.8) |  |  | $ | (99.1) |
As of August 31, 2022, the estimated undistributed earnings from foreign subsidiaries was $204.0 million. We have recorded a deferred income tax liability of $3.2 million for certain foreign withholding taxes and U.S. state taxes related to foreign earnings for which we do not assert indefinite reinvestment. With respect to unremitted earnings and original investments in foreign subsidiaries where we are continuing to assert indefinite reinvestment, any future remittances could be subject to additional foreign withholding taxes, U.S. state taxes, and certain tax impacts relating to foreign currency exchange effects. It is not practicable to estimate the amount of any unrecognized tax effects on these reinvested earnings and original investments in foreign subsidiaries. We account for the tax on Global Intangible Low-Taxed Income (“GILTI”) as a period cost and, therefore, do not record deferred taxes related to GILTI on our foreign subsidiaries. At August 31, 2022, we had federal tax credit carryforwards of approximately $4.9 million that begin to expire in 2029, and state tax credit carryforwards of less than $0.1 million, that begin to expire in 2028. The $4.9 million in federal tax credit carryforwards are subject to a full valuation allowance as we do not expect to realize any future tax benefit. At August 31, 2022, we had federal net operating loss carryforwards of $13.6 million that begin to expire in 2029, state net operating loss carryforwards of $33.9 million that begin to expire in 2023, and foreign net operating loss carryforwards of $7.1 million that begin to expire in 2028. The gross amount of unrecognized tax benefits as of August 31, 2022 and 2021 totaled $19.5 million and $17.7 million, respectively, which includes $18.8 million and $17.1 million, respectively, of net unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense; such accrued interest and penalties are not material. With few exceptions, we are no longer subject to United States federal, state, and local income tax examinations for years ended before 2016 or for foreign income tax examinations before 2017. We do not anticipate unrecognized tax benefits will significantly increase or decrease within the next 12 months. The following table reconciles the change in the unrecognized income tax benefit (reported in Other long-term liabilities on the Consolidated Balance Sheets) during the periods presented (in millions):
| Year Ended August 31,
| 2022 |  | 2021 |  | 2020
Unrecognized tax benefits balance at beginning of year | $ | 17.7 |  |  | $ | 17.2 |  |  | $ | 16.6 |
Additions based on tax positions related to the current year | 3.5 |  |  | 5.2 |  |  | 2.3 |
Additions for tax positions of prior years | 0.1 |  |  | 0.1 |  |  | — |
Reductions for tax positions of prior years | (0.2) |  |  | (0.1) |  |  | (0.4) |
Reductions due to settlements | — |  |  | (4.6) |  |  | (1.2) |
Reductions due to lapse of statute of limitations | (1.6) |  |  | (0.1) |  |  | (0.1) |
Unrecognized tax benefits balance at end of year | $ | 19.5 |  |  | $ | 17.7 |  |  | $ | 17.2 |
Total accrued interest was $2.1 million, $2.0 million, and $1.7 million as of August 31, 2022, 2021, and 2020, respectively. There were no accruals related to income tax penalties during fiscal 2022. Interest, net of tax benefits, and penalties are included in Income tax expense within the Consolidated Statements of Comprehensive Income. The classification of interest and penalties did not change during the current fiscal year. We are routinely under audit from various tax jurisdictions. We do not currently anticipate material audit assessments.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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