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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
| (in thousands)
Income (loss) before taxes: |  |  |  |  |
United States operations | $ | 97,900 |  |  | $ | 188,650 |  |  | $ | (102,300) |
Foreign operations | 219,493 |  |  | 38,130 |  |  | 193,116 |
Income before taxes | $ | 317,393 |  |  | $ | 226,780 |  |  | $ | 90,816 |
Income tax expense (benefit): |  |  |  |  |
Currently payable |  |  |  |  |
United States federal | $ | 34,310 |  |  | $ | 1,649 |  |  | $ | 3,488 |
United States state and local | 4,801 |  |  | 2,453 |  |  | 906 |
Foreign | 6,677 |  |  | 15,984 |  |  | 13,346 |
| 45,788 |  |  | 20,086 |  |  | 17,740 |
Deferred |  |  |  |  |
United States federal | (446) |  |  | 16,354 |  |  | 372 |
United States state and local | (50) |  |  | 5,988 |  |  | (1,923) |
Foreign | 4,353 |  |  | (14,489) |  |  | 3,909 |
| 3,857 |  |  | 7,853 |  |  | 2,358 |
Income tax expense | $ | 49,645 |  |  | $ | 27,939 |  |  | $ | 20,098 |
In addition to the above income tax expense associated with continuing operations, we also recorded an income tax benefit associated with discontinued operations of $2.5 million, $2.7 million, and $31.0 million, in 2022, 2021, and 2020, respectively.
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Effective income tax rate reconciliation from continuing operations: |  |  |  |  |
United States federal statutory rate | 21.0% |  | 21.0% |  | 21.0%
State and local income taxes | 1.2% |  | 3.4% |  | (0.7)%
Impact of change in tax contingencies | 0.1% |  | (0.7)% |  | 1.5%
Foreign income tax rate differences | (10.9)% |  | 0.7% |  | (27.9)%
Impact of change in deferred tax asset valuation allowance | (2.5)% |  | (19.1)% |  | 3.0%
Domestic permanent differences and tax credits | 6.3% |  | 6.0% |  | 25.5%
Impact of share-based compensation | 0.4% |  | 1.0% |  | 1.0%
Impact of CARES act | —% |  | —% |  | (1.3)%
| 15.6% |  | 12.3% |  | 22.1%
In 2022, the most significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of foreign tax rate differences. Foreign tax rate differences resulted in an income tax expense (benefit) of $(34.4) million, $1.5 million, and $(25.4) million in 2022, 2021, and 2020, respectively. An additional significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of domestic permanent differences and tax credits. We recognized a total income tax expense from domestic permanent differences and tax credits of $20.0 million in 2022, primarily associated with our foreign income inclusions. In addition, we recognized a total income tax benefit from changes in deferred tax asset valuation allowances of $7.9 million in 2022, primarily due to the release of a valuation allowance against the capital loss for the sale of certain real estate in the U.S. If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation. However, it is our intent to permanently reinvest the earnings of our non-U.S. subsidiaries in those operations and for continued non-U.S. growth opportunities. The components of deferred income taxes were as follows:
| December 31,
| 2022 |  | 2021
| (In thousands)
Components of deferred income tax balances: |  |  |
Deferred income tax liabilities: |  |  |
Plant, equipment, and intangibles | $ | (94,189) |  |  | $ | (89,632) |
Right of use asset | (19,853) |  |  | (18,254) |
| (114,042) |  |  | (107,886) |
Deferred income tax assets: |  |  |
Postretirement, pensions, and stock compensation | 17,368 |  |  | 32,201 |
Reserves and accruals | 25,519 |  |  | 20,362 |
Net operating loss, capital loss, and tax credit carryforwards | 149,607 |  |  | 84,285 |
Lease liability | 19,938 |  |  | 18,255 |
Valuation allowances | (142,330) |  |  | (66,594) |
| 70,102 |  |  | 88,509 |
Net deferred income tax liability | $ | (43,940) |  |  | $ | (19,377) |
On February 22, 2022, we completed the divestiture of Tripwire. The increase in deferred tax assets related to net operating loss, capital loss, and tax credit carryforwards primarily relates to the $72.8 million deferred tax asset associated with the capital loss that was derived on the sale. A full valuation allowance has been placed against this deferred tax asset as we do not expect to be able to utilize it prior to its expiration. As of December 31, 2022, we had $101.3 million of gross net operating loss carryforwards, $6.3 million of tax credit carryforwards, and $547.0 million of gross capital loss carryforwards. Unless otherwise utilized, net operating loss carryforwards will expire upon the filing of the tax returns for the following respective years: $1.5 million in 2022, $6.6 million between 2023 and 2025, and $50.5 million between 2026 and 2041. Net operating loss with an indefinite carryforward period total $42.7 million. Of the $101.3 million in net operating loss carryforwards, we have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $42.1 million of these net operating loss carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the net operating loss carryforwards. Unless otherwise utilized, tax credit carryforwards of $6.3 million will expire as follows: $0.6 million in 2022, $0.7 million between 2023 and 2025, and $3.3 million between 2026 and 2041. Tax credit carryforwards with an indefinite carryforward period total $1.7 million. We have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $3.5 million of these tax credit carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the tax credit carryforwards. Unless otherwise utilized, of the $547.0 million in gross capital loss carryforwards, $502.8 million will expire between 2025 and 2027 and the remaining $44.2 million have an indefinite carryforward period. A full valuation allowance has been recorded as we do not expect to be able to utilize the capital losses. The following tables summarize our net operating loss carryforwards and tax credit carryforwards as of December 31, 2022 by jurisdiction:
| Net Operating Loss Carryforwards
| (In thousands)
Australia | $ | 8,551 |
Germany | 19,824 |
Netherlands | 1,071 |
Other | 10,502 |
United Kingdom | 11,428 |
United States - Federal and various states | 49,955 |
Total | $ | 101,331 |
| Tax Credit Carryforwards
| (In thousands)
Belgium | $ | 1,227 |
United States | 5,072 |
Total | $ | 6,299 |
In 2022, we recognized a net $0.4 million increase to reserves for uncertain tax positions. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| 2022 |  | 2021
| (In thousands)
Balance at beginning of year | $ | 5,821 |  |  | $ | 8,573 |
Additions based on tax positions related to the current year | 359 |  |  | 422 |
Additions for tax positions of prior years | — |  |  | 168 |
Reductions for tax positions of prior years - Settlement | — |  |  | (3,264) |
Reduction for tax positions of prior years - Statute of limitations | — |  |  | (78) |
Balance at end of year | $ | 6,180 |  |  | $ | 5,821 |
The balance of $6.2 million at December 31, 2022 reflects tax positions that, if recognized, would impact our effective tax rate. Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses, respectively. We have no accrual for the payment of interest and penalties as of December 31, 2022 and 2021. Our federal tax return for the tax years 2014 and later remain subject to examination by the Internal Revenue Service. Our state and foreign income tax returns for the tax years 2012 and later remain subject to examination by various state and foreign tax authorities. On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law. We are evaluating the effect that the Act will have on our consolidated financial statements and related disclosures. None of the tax provisions of the Act are expected to have a material impact to our consolidated financial statements and related disclosures.

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