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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Earnings (loss) from continuing operations before income taxes | Following is a summary of earnings before income taxes for United States and foreign operations:
| 2019 |  | 2018 |  | 2017
United States | $ | 163,764 |  |  | 387,564 |  |  | 754,562 |
Foreign | 585,781 |  |  | 661,637 |  |  | 563,295 |
Earnings before income taxes | $ | 749,545 |  |  | 1,049,201 |  |  | 1,317,857 |
Income tax expense (benefit) | Income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consists of the following:
| 2019 |  | 2018 |  | 2017
Current income taxes: |  |  |  |  |
U.S. federal | $ | 19,936 |  |  | 22,700 |  |  | 327,697 |
State and local | 12,659 |  |  | 14,521 |  |  | 17,811 |
Foreign | 80,221 |  |  | 58,669 |  |  | 73,248 |
Total current | 112,816 |  |  | 95,890 |  |  | 418,756 |
Deferred income taxes: |  |  |  |  |
U.S. federal | 11,993 |  |  | 54,983 |  |  | (17,419 | )
State and local | 15,371 |  |  | 19,076 |  |  | (3,046 | )
Foreign | (135,206 | ) |  | 14,397 |  |  | (55,126 | )
Total deferred | (107,842 | ) |  | 88,456 |  |  | (75,591 | )
Total | $ | 4,974 |  |  | 184,346 |  |  | 343,165 |
Reconciliation of income tax expense (benefit) | Income tax expense (benefit) attributable to earnings before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate to earnings before income taxes as follows:
| 2019 |  | 2018 |  | 2017
Income taxes at statutory rate | $ | 157,404 |  |  | 220,332 |  |  | 461,250 |
State and local income taxes, net of federal income tax benefit | 22,185 |  |  | 22,315 |  |  | 10,133 |
Foreign income taxes(a) | (17,276 | ) |  | (39,915 | ) |  | (113,520 | )
Change in valuation allowance | (21,975 | ) |  | 2,472 |  |  | 10,008 |
European Restructuring(b) | (136,194 | ) |  | — |  |  | — |
Manufacturing deduction | — |  |  | — |  |  | (11,911 | )
2017 revaluation of deferred tax assets and liabilities (c) | — |  |  | — |  |  | (150,546 | )
Transition Tax | — |  |  | 28,201 |  |  | 105,165 |
Transition tax planning initiatives | — |  |  | (18,706 | ) |  | 14,825 |
Tax contingencies and audit settlements, net | 6,686 |  |  | (31,874 | ) |  | 23,097 |
Other, net | (5,856 | ) |  | 1,521 |  |  | (5,336 | )
| $ | 4,974 |  |  | 184,346 |  |  | 343,165 |
(a) Foreign income taxes include statutory rate differences, financing arrangements, withholding taxes, local income taxes, notional deductions, and other miscellaneous items. The significant decrease in foreign income taxes for 2018 is primarily due to the impact of the U.S. statutory rate reduction from 35% to 21% as a result of the Tax Cuts and Jobs Act (“TCJA”) discussed below. (b) The Company implemented select operational, administrative and financial restructurings that centralized certain business processes and intangible assets in various European jurisdictions into a new entity. The European Restructuring resulted in a current income tax liability of $148,240, calculated in part by measuring the fair value of intangible assets transferred. The Company offset the income tax liability with the utilization of $148,240 of deferred tax assets from accumulated net operating loss carry forwards. The European Restructuring also resulted in the Company recording a $136,194 deferred tax asset, and a corresponding deferred tax benefit, related to the tax basis of the intangible assets in the new entity. (c) 2017 revaluation of deferred tax assets and liabilities includes $106,107 related to the TCJA and $44,439 related to Belgium tax reform.
Deferred tax assets and deferred tax liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2019 and 2018 are presented below:
| 2019 |  | 2018
Deferred tax assets: |  |  |
Accounts receivable | $ | 7,063 |  |  | 8,312 |
Inventories | 50,585 |  |  | 47,212 |
Employee benefits | 36,068 |  |  | 37,335 |
Accrued expenses and other | 67,638 |  |  | 71,621 |
Deductible state tax and interest benefit | 3,665 |  |  | 2,904 |
Intangibles | 146,953 |  |  | 16,134 |
Lease liabilities | 86,717 |  |  | — |
Federal, foreign and state net operating losses and credits | 376,375 |  |  | 575,625 |
Gross deferred tax assets | 775,064 |  |  | 759,143 |
Valuation allowance | (232,196 | ) |  | (347,786 | )
Net deferred tax assets | 542,868 |  |  | 411,357 |
Deferred tax liabilities: |  |  |
Inventories | (12,885 | ) |  | (18,332 | )
Plant and equipment | (510,952 | ) |  | (477,734 | )
Intangibles | (182,424 | ) |  | (181,436 | )
Right of use assets | (83,271 | ) |  | — |
Other liabilities | (24,220 | ) |  | (96,134 | )
Gross deferred tax liabilities | (813,752 | ) |  | (773,636 | )
Net deferred tax liability | $ | (270,884 | ) |  | (362,279 | )
Reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2019 |  | 2018
Balance as of January 1 | $ | 1,330,713 |  |  | 65,631 |
Additions based on tax positions related to the current year (a) | 2,302 |  |  | 1,304,447 |
Additions for tax positions of acquired companies | 2,094 |  |  | 1,413 |
Additions for tax positions of prior years | 4,744 |  |  | 5,098 |
Transition tax planning initiatives | — |  |  | (27,470 | )
Reductions resulting from the lapse of the statute of limitations | (2,729 | ) |  | (8,110 | )
Reductions due to Luxembourg tax rate change | (46,841 | ) |  | — |
Settlements with taxing authorities | (1,929 | ) |  | (9,773 | )
Effects of foreign currency translation | (27,384 | ) |  | (523 | )
Balance as of December 31 | $ | 1,260,970 |  |  | 1,330,713 |
(a) 2018 includes tax effected loss of $1,298,737 on Luxembourg hybrid instruments redemptions. The tax effected loss was adjusted for tax rate and foreign currency translation changes in 2019, resulting in an updated balance of $1,224,545 as of December 31, 2019. This $1,224,545 of unrecognized benefit is presented as a reduction to the related deferred tax asset in the balance sheet.

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