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INCOME TAX | 12 Months Ended
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Aug. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAX | NOTE 12. INCOME TAX The components of earnings before income taxes were as follows:
|  | Year Ended August 31,
(in thousands) |  | 2024 |  | 2023 |  | 2022
United States |  | $ | 631,592 |  |  | $ | 1,095,099 |  |  | $ | 1,197,769 |
Foreign |  | 4,079 |  |  | 26,868 |  |  | 317,378 |
Total |  | $ | 635,671 |  |  | $ | 1,121,967 |  |  | $ | 1,515,147 |
The income taxes (benefit) included in the consolidated statements of earnings were as follows:
|  | Year Ended August 31,
(in thousands) |  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
United States |  | $ | 143,462 |  |  | $ | 168,399 |  |  | $ | 122,334 |
Foreign |  | 163 |  |  | 6,089 |  |  | 63,912 |
State and local |  | 18,035 |  |  | 32,916 |  |  | 20,228 |
Current taxes |  | 161,660 |  |  | 207,404 |  |  | 206,474 |
Deferred: |  |  |  |  |  |
United States |  | (8,075) |  |  | 46,008 |  |  | 81,162 |
Foreign |  | (7,684) |  |  | (847) |  |  | (3,388) |
State and local |  | 4,279 |  |  | 9,642 |  |  | 13,637 |
Deferred taxes |  | (11,480) |  |  | 54,803 |  |  | 91,411 |
Total income taxes |  | $ | 150,180 |  |  | $ | 262,207 |  |  | $ | 297,885 |
A reconciliation of the federal statutory rate to the Company's effective income tax rate, including material items impacting the effective income tax rate, is as follows:
|  | Year Ended August 31,
(in thousands) |  | 2024 |  | 2023 |  | 2022
Income tax expense at statutory rate |  | $ | 133,491 |  | $ | 235,613 |  | $ | 318,181
State and local taxes(1) |  | 17,629 |  | 33,621 |  | 26,753
Research and development credit(1) |  | (1,151) |  | (7,986) |  | (13,102)
Capital loss(2) |  | — |  | — |  | (34,736)
Other |  | 211 |  | 959 |  | 789
Income tax expense |  | $ | 150,180 |  | $ | 262,207 |  | $ | 297,885
Effective income tax rate |  | 23.6 | % |  | 23.4 | % |  | 19.7 | %
__________________________________ (1) 2024, 2023 and 2022 include impacts of uncertain tax positions. (2) Resulted from a tax restructuring transaction. The Company plans to repatriate the current and future earnings from the Europe Steel Group segment and certain immaterial foreign jurisdictions in the Emerging Business Group segment and has recorded an immaterial amount of tax expense related to such earnings. The Company considers the undistributed earnings of the Europe Steel Group segment prior to August 31, 2019 and all other undistributed earnings of the Emerging Business Group segment 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) |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Net operating losses and credits |  | $ | 278,855 |  |  | $ | 298,624 |
Capitalized research and development |  | 57,597 |  |  | 45,669 |
ROU operating lease liabilities |  | 41,838 |  |  | 39,984 |
Deferred compensation and employee benefits |  | 32,377 |  |  | 33,491 |
Reserves and other accrued expenses |  | 13,839 |  |  | 16,510 |
Other |  | 19,122 |  |  | 21,750 |
Total deferred tax assets |  | 443,628 |  |  | 456,028 |
Valuation allowance for deferred tax assets |  | (256,826) |  |  | (280,463) |
Deferred tax assets, net |  | 186,802 |  |  | 175,565 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | (353,439) |  |  | (351,900) |
Intangible assets |  | (37,233) |  |  | (44,168) |
ROU operating lease assets |  | (41,463) |  |  | (38,801) |
Derivatives |  | (6,850) |  |  | (35,992) |
Other |  | (13,093) |  |  | (11,453) |
Total deferred tax liabilities |  | (452,078) |  |  | (482,314) |
Net deferred tax liabilities |  | $ | (265,276) |  |  | $ | (306,749) |
Net operating losses giving rise to deferred tax assets consist of $299.4 million of state net operating losses and $923.3 million of foreign net operating losses that expire in varying amounts beginning in 2025 (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. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:
(in thousands) |  | 2024 |  | 2023 |  | 2022
Balance at September 1, |  | $ | 44,165 |  |  | $ | 29,747 |  |  | $ | 5,531 |
Change for tax positions of current year |  | — |  |  | 14,792 |  |  | 17,461 |
Change for tax positions of prior years |  | 1,556 |  |  | (374) |  |  | 6,755 |
Balance at August 31, (1) |  | $ | 45,721 |  |  | $ | 44,165 |  |  | $ | 29,747 |
__________________________________ (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. At August 31, 2024 and 2023, the Company had accrued interest and penalties related to uncertain tax positions of $4.1 million and $1.4 million, respectively. During 2025, the Company anticipates the statute of limitations relating to positions of the Company in prior year income tax returns may lapse. As a result, it is reasonably possible that the amount of unrecognized tax benefits may decrease by $9.5 million. 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 — 2021 and forward U.S. States — 2020 and forward Foreign — 2019 and forward

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