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INCOME TAX | 12 Months Ended
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Aug. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAX | NOTE 13. INCOME TAX The components of earnings from continuing operations before income taxes were as follows:
|  | Year Ended August 31,
(in thousands) |  | 2022 |  | 2021 |  | 2020
United States |  | $ | 1,197,769 |  |  | $ | 413,616 |  |  | $ | 334,170 |
Foreign |  | 317,378 |  |  | 120,402 |  |  | 36,608 |
Total |  | $ | 1,515,147 |  |  | $ | 534,018 |  |  | $ | 370,778 |
The income taxes (benefit) included in the consolidated statements of earnings were as follows:
|  | Year Ended August 31,
(in thousands) |  | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |  |
United States |  | $ | 122,334 |  |  | $ | 113,696 |  |  | $ | 26,901 |
Foreign |  | 63,912 |  |  | 25,642 |  |  | 7,588 |
State and local |  | 20,228 |  |  | 19,458 |  |  | 7,133 |
Current taxes |  | 206,474 |  |  | 158,796 |  |  | 41,622 |
Deferred: |  |  |  |  |  |
United States |  | 81,162 |  |  | (10,563) |  |  | 45,771 |
Foreign |  | (3,388) |  |  | (2,512) |  |  | (43) |
State and local |  | 13,637 |  |  | (24,568) |  |  | 5,832 |
Deferred taxes |  | 91,411 |  |  | (37,643) |  |  | 51,560 |
Total income taxes on income |  | 297,885 |  |  | 121,153 |  |  | 93,182 |
Income taxes on discontinued operations |  | — |  |  | — |  |  | 706 |
Income taxes on continuing operations |  | $ | 297,885 |  |  | $ | 121,153 |  |  | $ | 92,476 |
A reconciliation of the federal statutory rate to the Company's effective income tax rate from continuing operations, including material items impacting the effective income tax rate, is as follows:
|  | Year Ended August 31,
(in thousands) |  | 2022 |  | 2021 |  | 2020
Income tax expense at statutory rate |  | $ | 318,181 |  | $ | 112,144 |  | $ | 77,863
Change in valuation allowance |  | (447) |  | 37,092 |  | 968
Foreign tax impairment on valuation of subsidiaries (1) |  | — |  | (29,866) |  | 5,084
Global intangible low-taxed income (2) |  | 685 |  | 17,263 |  | 1,252
Nontaxable foreign interest (1) |  | 3 |  | (14,617) |  | 8
State and local taxes (3)(4) |  | 26,753 |  | (3,838) |  | 9,895
Capital loss(5) |  | (34,736) |  | — |  | —
Research and development credit(4) |  | (13,102) |  | (1,289) |  | (563)
Other |  | 548 |  | 4,264 |  | (2,031)
Income tax expense on continuing operations |  | $ | 297,885 |  | $ | 121,153 |  | $ | 92,476
Effective income tax rate from continuing operations |  | 19.7 | % |  | 22.7 | % |  | 24.9 | %
__________________________________ (1) Fully offset by a valuation allowance. (2) 2021 includes the tax effect of a gain recognized in connection with a global tax restructuring. (3) State and local taxes in 2021 includes a $19.9 million benefit related to the release of certain state valuation allowances. (4) 2022 includes the impact of uncertain tax positions. (5) Resulted from a tax restructuring transaction. The Company plans to repatriate the current and future earnings from material jurisdictions within the Europe segment and recorded an immaterial amount of tax expense related to such future distributions. The Company considers all undistributed earnings of its non-U.S. subsidiaries prior to August 31, 2019 to be indefinitely reinvested and has not recorded deferred tax liabilities on such earnings. The income tax effects of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:
|  | August 31,
(in thousands) |  | 2022 |  | 2021
Deferred tax assets: |  |  |  |
Net operating losses and credits |  | $ | 300,787 |  |  | $ | 291,145 |
Deferred compensation and employee benefits |  | 39,095 |  |  | 64,693 |
ROU operating lease liabilities |  | 33,398 |  |  | 28,915 |
Reserves and other accrued expenses |  | 11,730 |  |  | 13,846 |
Other |  | 17,253 |  |  | 3,817 |
Total deferred tax assets |  | 402,263 |  |  | 402,416 |
Valuation allowance for deferred tax assets |  | (268,547) |  |  | (278,099) |
Deferred tax assets, net |  | 133,716 |  |  | 124,317 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | (261,638) |  |  | (180,925) |
ROU operating lease assets |  | (32,444) |  |  | (26,950) |
Intangible assets |  | (48,558) |  |  | — |
Derivatives |  | (27,324) |  |  | (5,123) |
Other |  | (14,054) |  |  | (3,817) |
Total deferred tax liabilities |  | (384,018) |  |  | (216,815) |
Net deferred tax liabilities |  | $ | (250,302) |  |  | $ | (92,498) |
Net operating losses giving rise to deferred tax assets consist of $365.5 million of state net operating losses, $65.8 million of U.S. federal net operating losses and $922.4 million of foreign net operating losses that expire in varying amounts beginning in 2023 (with certain amounts having indefinite carryforward periods). These assets will be reduced as income tax expense is recognized in future periods. The Company maintains a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized. The Company's valuation allowances primarily relate to net operating loss and credit carryforwards in certain state and foreign jurisdictions for which utilization is uncertain. During 2022, the Company recorded a net $9.6 million decrease in valuation allowances, principally related to the dissolution of certain foreign subsidiaries. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:
(in thousands) |  | 2022 |  | 2021 |  | 2020
Balance at September 1, |  | $ | 5,531 |  |  | $ | 8,652 |  |  | $ | 8,652 |
Change for tax positions of current year |  | 17,461 |  |  | — |  |  | — |
Change for tax positions of prior years |  | 6,755 |  |  | — |  |  | — |
Reductions due to lapse of statute of limitations |  | — |  |  | (3,121) |  |  | — |
Balance at August 31, (1) |  | $ | 29,747 |  |  | $ | 5,531 |  |  | $ | 8,652 |
__________________________________ (1) The full balance of unrecognized income tax benefits in each year, if recognized, would have impacted the Company’s effective income tax rate at the end of each respective year. Accrued interest and penalties related to uncertain tax positions were not material in any period presented. The Company files income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, the Company and its subsidiaries are subject to examination by various taxing authorities. The following is a summary of all fiscal years that are open to examination. U.S. Federal — 2019 and forward U.S. States — 2018 and forward Foreign — 2014 and forward

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