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Income taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes The following table summarizes the components of the provision for income taxes from continuing operations:
| 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 51,717 |  |  | $ | 32,798 |  |  | $ | 134,336 |
State | 8,266 |  |  | 8,747 |  |  | 16,970 |
Non-U.S. | 30,408 |  |  | 56,442 |  |  | 35,399 |
Deferred: |  |  |  |  |
Federal | (24,396) |  |  | (27,528) |  |  | (85,272) |
State | 5,439 |  |  | 10,116 |  |  | (16,933) |
Non-U.S. | 5,006 |  |  | 2,428 |  |  | (10,151) |
| $ | 76,440 |  |  | $ | 83,003 |  |  | $ | 74,349 |
At December 31, 2023, the cumulative unremitted earnings of subsidiaries outside the U.S. that are considered non-permanently reinvested and for which taxes have been provided approximated $1.4 billion. At December 31, 2023, the cumulative unremitted earnings of subsidiaries outside the U.S. that are considered permanently reinvested approximated $0.3 billion. Earnings considered permanently reinvested are expected to be reinvested indefinitely and, as a result, no additional deferred tax liability has been recognized with regard to these earnings. The following table summarizes the U.S. and non-U.S. components of income from continuing operations before taxes:
| 2023 |  | 2022 |  | 2021
U.S. | $ | 45,363 |  |  | $ | 164,151 |  |  | $ | 209,231 |
Non-U.S. | 388,649 |  |  | 281,768 |  |  | 350,237 |
| $ | 434,012 |  |  | $ | 445,919 |  |  | $ | 559,468 |
Reconciliations between the statutory federal income tax rate and the effective income tax rate are as follows:
| 2023 |  | 2022 |  | 2021
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Tax effect of international items | (6.1) |  |  | (4.6) |  |  | (6.0) |
Legal entity rationalization - deferred taxes | 5.7 |  |  | — |  |  | — |
Excess tax benefits related to share-based compensation | (0.3) |  |  | (0.3) |  |  | (1.1) |
State taxes, net of federal benefit | 0.4 |  |  | 3.4 |  |  | 0.1 |
Uncertain tax contingencies | (0.6) |  |  | (0.4) |  |  | (0.1) |
Contingent consideration | (1.3) |  |  | 0.1 |  |  | 0.2 |
Research and development tax credit | (1.3) |  |  | (1.0) |  |  | (0.8) |
Other, net | 0.1 |  |  | 0.5 |  |  | — |
| 17.6 | % |  | 18.6 | % |  | 13.3 | %
The effective income tax rate for 2023 was 17.6% compared to 18.6% for 2022. The effective income tax rate for 2023 reflects the impact of deferred charges resulting from a legal entity rationalization and the impact of a non-taxable contingent consideration adjustment recognized in connection with a decrease in the estimated fair value of our contingent consideration liabilities. Additionally, the effective income tax rate for 2023 reflects a tax benefit associated with the TRIP pension settlement charge. The effective income tax rate for 2022 reflects tax expense resulting from a deferred charge relating to the 2022 Restructuring Plan. The effective income tax rates for both 2023 and 2022 reflect tax expense resulting from a U.S. law effective in 2022 requiring capitalization of certain research and development expenditures. Additionally, the effective income tax rates for both 2023 and 2022 reflect a net excess tax benefit related to share-based compensation and a tax benefit from research and development tax credits. We are routinely subject to examinations by various taxing authorities. In conjunction with these examinations and as a regular practice, we establish and adjust reserves with respect to its uncertain tax positions to address developments related to those positions. We realized a net benefit of $2.3 million, $2.0 million and $0.8 million in 2023, 2022 and 2021 respectively, as a result of reducing our reserves with respect to uncertain tax positions, principally due to the expiration of a number of applicable statutes of limitations. The following table summarizes significant components of our deferred tax assets and liabilities at December 31, 2023 and 2022:
| 2023 |  | 2022
Deferred tax assets: |  |  |
Tax loss and credit carryforwards | $ | 114,147 |  |  | $ | 110,857 |
Lease Liabilities | 30,397 |  |  | 32,339 |
Pension | — |  |  | 1,163 |
Reserves and accruals | 72,040 |  |  | 64,498 |
Other | 33,472 |  |  | 24,013 |
Less: valuation allowances | (95,747) |  |  | (91,531) |
Total deferred tax assets | 154,309 |  |  | 141,339 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | 34,852 |  |  | 25,427 |
Intangibles — stock acquisitions | 462,559 |  |  | 379,298 |
Unremitted non-U.S. earnings | 61,734 |  |  | 67,833 |
Lease Assets | 30,397 |  |  | 32,339 |
Other | 14,099 |  |  | 18,926 |
Total deferred tax liabilities | 603,641 |  |  | 523,823 |
Net deferred tax liability | $ | (449,332) |  |  | $ | (382,484) |
Under the tax laws of various jurisdictions in which we operate, deductions or credits that cannot be fully utilized for tax purposes during the current year may be carried forward, subject to statutory limitations, to reduce taxable income or taxes payable in a future tax year. At December 31, 2023, the tax effect of such carryforwards approximated $114.1 million. Of this amount, $21.2 million has no expiration date, $6.6 million expires after 2023 but before the end of 2028 and $86.3 million expires after 2028. A portion of these carryforwards consists of tax losses and credits obtained by us as a result of acquisitions; the utilization of these carryforwards is subject to an annual limitation imposed by Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), which limits a company’s ability to deduct prior net operating losses following a more than 50 percent change in ownership. It is not expected that the Section 382 limitation will prevent us ultimately from utilizing the applicable loss carryforwards. The determination of state net operating loss carryforwards is dependent upon the U.S. subsidiaries’ taxable income or loss, the state’s proportion of each subsidiary's taxable net income and the application of state laws, which can change from year to year and impact the amount of such carryforward. The valuation allowance for deferred tax assets of $95.7 million and $91.5 million at December 31, 2023 and 2022, respectively, relates principally to the uncertainty of our ability to utilize certain deferred tax assets, primarily tax loss and credit carryforwards in various jurisdictions. The valuation allowance was calculated in accordance with applicable accounting standards, which require that a valuation allowance be established and maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. Uncertain Tax Positions: The following table is a reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021:
| 2023 |  | 2022 |  | 2021
Balance at January 1 | $ | 4,260 |  |  | $ | 6,105 |  |  | $ | 7,230 |
Increase in unrecognized tax benefits related to prior years | — |  |  | 215 |  |  | — |
Decrease in unrecognized tax benefits related to prior years | — |  |  | (761) |  |  | — |
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations | (2,287) |  |  | (1,117) |  |  | (956) |
(Decrease) increase in unrecognized tax benefits due to foreign currency translation | 47 |  |  | (182) |  |  | (169) |
Balance at December 31 | $ | 2,020 |  |  | $ | 4,260 |  |  | $ | 6,105 |
The total liabilities associated with the unrecognized tax benefits that, if recognized, would impact the effective tax rate for continuing operations, were $1.3 million at December 31, 2023. We accrue interest and penalties associated with unrecognized tax benefits in income tax expense in the consolidated statements of income, and the corresponding liability is included in the consolidated balance sheets. The net interest expense (benefit) and penalties reflected in income from continuing operations for the year ended December 31, 2023 was $0.1 million and $(0.6) million, respectively; for the year ended December 31, 2022 was $0.2 million and $(0.2) million, respectively; and for the year ended December 31, 2021 was $0.2 million and $(0.3) million, respectively. The liabilities in the consolidated balance sheets for interest and penalties at December 31, 2023 were $0.4 million and $1.0 million, respectively, and at December 31, 2022 were $0.6 million and $1.5 million, respectively. The taxable years for which the applicable statute of limitations remains open by major tax jurisdictions are as follows:
| Beginning |  | Ending
U.S. | 2020 |  | 2023
Canada | 2019 |  | 2023
China | 2018 |  | 2023
Czech Republic | 2020 |  | 2023
France | 2021 |  | 2023
Germany | 2011 |  | 2023
India | 2015 |  | 2023
Ireland | 2019 |  | 2023
Italy | 2018 |  | 2023
Malaysia | 2017 |  | 2023
Singapore | 2019 |  | 2023
We are routinely subject to income tax examinations by various taxing authorities. As of December 31, 2023, the most significant tax examinations in process were in Germany and Italy. The date at which these examinations may be concluded and the ultimate outcome of the examinations are uncertain. As a result of the uncertain outcome of these ongoing examinations, future examinations or the expiration of statutes of limitation, it is reasonably possible that the related unrecognized tax benefits for tax positions taken could materially change from those recorded as liabilities at December 31, 2023. Due to the potential for resolution of certain examinations, and the expiration of various statutes of limitations, it is reasonably possible that our unrecognized tax benefits may change within the next year by a range of zero to $0.7 million. Supplemental cash flow information
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Income taxes paid, net of refunds | $ | 114,211 |  |  | $ | 162,046 |  |  | $ | 108,609 |

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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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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