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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income (loss) from continuing operations before income taxes as shown in the Consolidated Statements of Operations consists of the following:
| Years Ended December 31,
| 2021 |  | 2020 |  | 2019
| (in millions)
Domestic | $ | 38.4 |  |  | $ | (88.3) |  |  | $ | (67.3) |
Foreign | 174.0 |  |  | 61.5 |  |  | 71.6 |
Total | $ | 212.4 |  |  | $ | (26.8) |  |  | $ | 4.3 |
A summary of income tax expense (benefit) from continuing operations in the Consolidated Statements of Operations is as follows:
| Years Ended December 31,
| 2021 |  | 2020 |  | 2019
| (in millions)
Current: |  |  |  |  |
Federal | $ | 10.4 |  |  | $ | (15.1) |  |  | $ | (1.4) |
Foreign | 27.8 |  |  | 26.3 |  |  | 24.9 |
State | 1.8 |  |  | (0.1) |  |  | 1.3 |
| 40.0 |  |  | 11.1 |  |  | 24.8 |
Deferred: |  |  |  |  |
Federal | 2.0 |  |  | (5.5) |  |  | (6.4) |
Foreign | (5.9) |  |  | (8.1) |  |  | (19.5) |
State | (1.3) |  |  | (1.0) |  |  | (2.4) |
| (5.2) |  |  | (14.6) |  |  | (28.3) |
Total | $ | 34.8 |  |  | $ | (3.5) |  |  | $ | (3.5) |
The GILTI provisions require us to include in our U.S. income tax return certain current foreign subsidiary earnings net of foreign tax credits, subject to limitation. We elected to account for the GILTI tax in the period in which it is incurred. As a result of these provisions, our effective tax rate was increased by 54.8% in 2019. However, due to the GILTI high tax exception election enacted during 2020, we recorded a GILTI benefit that reduced the effective tax rate by 17.6% in 2020, after applying the retroactive benefit to prior years. For 2021 our effective tax rate was increased by 2.7% due to GILTI. Significant components of deferred income tax assets and liabilities at December 31, 2021 and 2020 are as follows:
| 2021 |  | 2020
| (in millions)
Deferred income tax assets: |  |  |
Net operating losses and tax credits | $ | 26.6 |  |  | $ | 20.5 |
Postretirement benefits other than pensions | 0.3 |  |  | 0.5 |
Environmental reserves | 11.6 |  |  | 9.5 |
Retained liabilities of previously owned businesses | 0.7 |  |  | 0.8 |
Accruals and reserves | 3.6 |  |  | 5.2 |
Operating leases | 12.7 |  |  | 11.1 |
Cross currency swap | — |  |  | 2.2 |
Interest | 8.8 |  |  | 11.0 |
Compensation and benefits | 8.6 |  |  | 7.1 |
Inventories | 0.4 |  |  |
Other | — |  |  | 0.8 |
Gross deferred income tax assets | 73.3 |  |  | 68.7 |
Valuation allowance | (8.9) |  |  | (6.6) |
Total deferred income tax assets | 64.4 |  |  | 62.1 |
Deferred income tax liabilities: |  |  |
Depreciation and amortization | (186.9) |  |  | (151.6) |
Operating leases | (12.7) |  |  | (11.1) |
Cross currency swap | (2.1) |  |  | — |
Inventories | — |  |  | (0.4) |
Pension obligations | (4.4) |  |  | (2.9) |
Other | (0.6) |  |  | — |
Total deferred income tax liabilities | (206.7) |  |  | (166.0) |
Net deferred income tax liabilities | $ | (142.3) |  |  | $ | (103.9) |
The net deferred tax assets (liabilities) are reflected on a jurisdictional basis as a component of the December 31, 2021 and 2020 Consolidated Balance Sheet line items noted below:
| 2021 |  | 2020
| (in millions)
Other assets (non-current) | $ | 23.1 |  |  | $ | 23.9 |
Deferred taxes and non-current income taxes payable | (165.4) |  |  | (127.8) |
Net deferred income tax liabilities | $ | (142.3) |  |  | $ | (103.9) |
At December 31, 2021, we had $73.8 million of foreign net operating loss carryforwards, of which $49.4 million expire at various dates from 2023 through 2040, and $24.3 million have an indefinite carryforward period. We also had state net operating loss carryforwards with a tax effect of $4.4 million which expire at various dates from 2022 through 2040. These net operating loss carryforwards may be used to offset a portion of future taxable income and, thereby, reduce or eliminate our state or foreign income taxes otherwise payable. We determined, based on the available evidence, that it is uncertain whether certain entities in various jurisdictions will generate sufficient future taxable income to recognize certain of these deferred tax assets. As a result, valuation allowances of $8.9 million and $6.6 million have been recorded as of December 31, 2021 and 2020, respectively. Valuation allowances recorded relate to certain state and foreign net operating losses and other net deferred tax assets in jurisdictions where future taxable income is uncertain. Valuation allowances may arise associated with deferred tax assets recorded in purchase accounting. In accordance with applicable accounting guidelines, any reversal of a valuation allowance that was recorded in purchase accounting reduces income tax expense. The effective income tax rate from operations varied from the statutory federal income tax rate as follows:
| Percent of Pretax Income Years Ended December 31,
| 2021 |  | 2020 |  | 2019
Statutory federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
U.S. taxation of foreign profits, net of foreign tax credits | (1.7) |  |  | (0.6) |  |  | 3.3 |
Research and employment tax credits | (0.4) |  |  | 3.0 |  |  | (17.2) |
State and local taxes | 0.2 |  |  | 3.2 |  |  | (22.4) |
Foreign tax rate differences | (1.6) |  |  | (19.4) |  |  | 152.3 |
Statutory changes in tax rates | 0.1 |  |  | (1.2) |  |  | 17.8 |
Valuation allowance | (1.3) |  |  | (2.5) |  |  | (349.2) |
Changes in uncertain tax positions | (2.9) |  |  | (2.0) |  |  | (9.0) |
Nondeductible expenses | 1.2 |  |  | (7.7) |  |  | 57.3 |
GILTI and FDII | 2.1 |  |  | 17.6 |  |  | 54.8 |
Other items, net | (0.3) |  |  | 1.8 |  |  | 12.0 |
Effective income tax rate | 16.4 | % |  | 13.2 | % |  | (79.3) | %
The effective tax rate for 2021 was primarily driven by the foreign rate differential related to certain foreign divestitures and earnings that were subject to lower tax rates, the effect of these items resulted in a net $3.1 million decrease in income tax expense. Additionally, the effective tax rate was increased by GILTI and non-deductible expenses and decreased by the release of uncertain tax positions associated with audit closures and statute expirations, resulting in a net increase to tax expense of $1.0 million. As of December 31, 2021 and 2020, we had $5.5 million and $12.2 million, respectively, of gross unrecognized tax benefits. Of the gross unrecognized tax benefit balances as of December 31, 2021 and 2020, $5.1 million and $8.3 million, respectively, would have an impact on our effective tax rate if ultimately recognized. We record interest and penalties related to unrecognized tax benefits in income tax expense. In addition to the gross unrecognized tax benefits above, we had $1.5 million and $3.3 million accrued for interest and penalties at December 31, 2021 and 2020, respectively. Income tax expense for the year ended December 31, 2021 includes $(1.7) million for interest and penalties related to unrecognized tax benefits. Income tax expense for the years ended December 31, 2020 and 2019 included $0.4 million and $0.5 million, respectively, for interest and penalties related to unrecognized tax benefits. A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits (excluding interest) is as follows:
(in millions) | 2021 |  | 2020 |  | 2019
Balance at beginning of year | $ | 12.2 |  |  | $ | 10.1 |  |  | $ | 2.9 |
Additions based on tax positions related to the current year | 0.9 |  |  | 1.9 |  |  | 1.2 |
Additions for tax positions of prior years | (0.2) |  |  | 0.2 |  |  | 7.2 |
Reductions as a result of a lapse in the statute of limitations | (2.9) |  |  | — |  |  | (1.2) |
Reductions as a result of audit/other settlements | (4.5) |  |  | — |  |  | — |
Balance at end of year | $ | 5.5 |  |  | $ | 12.2 |  |  | $ | 10.1 |
U.S. federal income tax returns for tax years 2018 and forward remain open to examination. In June 2017, the U.S. Internal Revenue Service (“IRS”) began an examination of our 2014 through 2017 U.S. federal income tax returns. The IRS audit concluded during the quarter ended June 30, 2021 and as a result of the conclusion of the audit, we received a cash refund of $24.7 million, plus $1.7 million of applicable interest, in the fourth quarter of 2021. We and our subsidiaries are also subject to income tax in multiple state, local and foreign jurisdictions. Various state and foreign tax returns are currently under examination. Substantially all significant state, local and foreign income tax returns for the years 2017 and forward are open to examination. We expect that some of these examinations may conclude within the next twelve months, however, the final outcomes are not yet determinable. In addition, gross unrecognized tax benefits may be reduced by $1 million within the next twelve months as the applicable statute of limitation expire.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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