Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act represented significant U.S. federal tax reform legislation that included a permanent reduction to the U.S. federal corporate income tax rate. The permanent reduction to the federal corporate income tax rate resulted in a one-time benefit of $267.0 million related to the value of our deferred tax liabilities and a benefit of $3.2 million related to the lower blended tax rate on our earnings, in the year ended March 31, 2018, resulting in a net benefit of $270.2 million. Additionally, the tax reform legislation subjects certain of our cumulative foreign earnings and profits to U.S. income taxes through a deemed repatriation, which resulted in a charge of $1.9 million in the year ended March 31, 2018.

Income (loss) before income taxes consists of the following:



	Year Ended March 31,
(In thousands)	2019			2018		2017
United States	$	(52,313	)	$	84,435	$	93,582
Foreign	14,258			22,651		17,268
	$	(38,055	)	$	107,086	$	110,850

The (benefit) provision for income taxes consists of the following:



	Year Ended March 31,
(In thousands)	2019			2018			2017
Current
Federal	$	27,629		$	31,327		$	40,183
State	3,156			2,686			2,808
Foreign	7,193			5,588			4,242
Deferred
Federal	(35,760		)	(270,796		)	(5,421		)
State	(4,101		)	(1,240		)	(163		)
Foreign	(372		)	(49		)	(194		)
Total (benefit) provision for income taxes	$	(2,255	)	$	(232,484	)	$	41,455

The principal components of our deferred tax balances are as follows:



	March 31,
(In thousands)	2019			2018
Deferred Tax Assets
Allowance for doubtful accounts and sales returns	$	3,285		$	2,806
Inventory capitalization	1,245			1,176
Inventory reserves	1,267			540
Net operating loss carryforwards	226			609
State income taxes	9,003			10,154
Accrued liabilities	1,785			2,210
Accrued compensation	4,416			4,992
Stock compensation	4,206			5,038
Foreign tax credit	3,236			—
Interest	154			—
Other	7,691			4,975
Total deferred tax assets	$	36,514		$	32,500

Deferred Tax Liabilities
Property, plant and equipment	$	(6,002	)	$	(6,032	)
Intangible assets	(425,134		)	(467,388		)
Adoption of revenue recognition standard	(721		)	—
Total deferred tax liabilities	$	(431,857	)	$	(473,420	)

Net deferred tax liability before valuation allowance	$	(395,343	)	$	(440,920	)
Valuation allowance	(3,236		)	(609		)
Net deferred tax liability	$	(398,579	)	$	(441,529	)

The net deferred tax liability shown above is net of $1.0 million of long-term deferred tax assets as of March 31, 2019 and $1.0 million of long-term deferred tax assets as of March 31, 2018.

At March 31, 2019 and 2018, we have a valuation allowance of $3.2 million and $0.6 million, respectively, related to certain deferred tax assets that we have concluded are not more likely than not to be realized. The increase in the valuation allowance related to unutilized foreign tax credit carryovers, as further described below.

A reconciliation of the effective tax rate compared to the statutory U.S. Federal tax rate is as follows:



	Year Ended March 31,
	2019					2018					2017
(In thousands)				%					%					%
Income tax (benefit) provision at statutory rate	$	(7,992	)	21.0		$	37,480		35.0		$	38,798		35.0
Foreign tax provision (benefit)	2,866			(7.5	)	(2,084		)	(1.9	)	(2,322		)	(2.1	)
State income taxes, net of federal income tax benefit	(1,710		)	4.5		1,414			1.3		1,820			1.7
Impact of tax legislation	—			—		(268,244		)	(250.5	)	—			—
Goodwill impairment	5,616			(14.8	)	—			—		3,208			2.9
R&D	(629		)	1.7		—			—		—			—
Compensation limitations	296			(0.8	)	—			—		—			—
Valuation allowance	2,627			(6.9	)	(2,828		)	(2.6	)	—			—
Gain on sale	1,312			(3.4	)	—			—		—			—
Nondeductible transaction costs	—			—		—			—		686			0.6
Nondeductible compensation	—			—		—			—		342			0.3
Other	(4,641		)	12.1		1,778			1.6		(1,077		)	(1.0	)
Total (benefit) provision for income taxes	$	(2,255	)	5.9		$	(232,484	)	(217.1	)	$	41,455		37.4

Uncertain tax liability activity is as follows:



	2019			2018			2017
(In thousands)
Balance – beginning of year	$	10,827		$	3,651		$	4,084
Additions based on tax positions related to the current year	585			7,286			583
Reductions based on lapse of statute of limitations	(650		)	(110		)	(1,016		)
Payments and other movements	(888		)	—			—
Balance – end of year	$	9,874		$	10,827		$	3,651

We recognize interest and penalties related to uncertain tax positions as a component of income tax (benefit) expense. We did not incur any material interest or penalties related to income taxes in 2019, 2018 or 2017. We do not anticipate any events or circumstances that would cause a significant change to these uncertainties during the ensuing year. We are subject to taxation in the United States and various state and foreign jurisdictions, and we are generally open to examination from the year ended March 31, 2016 forward.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Pursuant to the FASB guidance, we elected to treat any potential GILTI inclusions as a period cost without recognizing any related potential deferred tax liabilities or assets.

Our current foreign tax credit analysis is suggestive of annual foreign tax credit limitation anticipated to be less than foreign income taxes accrued during the year. The operating conditions giving rise to such excess credit condition may be anticipated to continue into future tax years. As a result, we have recognized a full valuation allowance for the deferred tax asset recognized in respect of unutilized foreign tax credit carryovers, which are limited to ten-year carryovers under IRC §904(c). Such excess credit condition did not exist in prior years; however, the Tax Act, enacted in 2017, required substantial changes in the manner of calculating foreign tax credit limitation.