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INCOME TAXES | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | Note 13 — INCOME TAXES Income from continuing operations, before income taxes is summarized below based on the geographic location of the operation to which such earnings are attributable. Income from continuing operations, before income taxes consists of the following:
(In millions) |  | 2022 |  | 2021 |  | 2020
Domestic |  | $ | (82.4) |  |  | $ | (22.1) |  |  | $ | (53.3) |
International |  | 146.2 |  |  | 225.6 |  |  | 114.4 |
Income from continuing operations, before income taxes |  | $ | 63.8 |  |  | $ | 203.5 |  |  | $ | 61.1 |
A summary of income tax expense from continuing operations is as follows:
(In millions) |  | 2022 |  | 2021 |  | 2020
Current income tax expense (benefit): |  |  |  |  |  |
Domestic |  | $ | (76.2) |  |  | $ | 23.4 |  |  | $ | (42.3) |
International |  | 56.4 |  |  | 50.8 |  |  | 31.9 |
Total current income tax expense (benefit) |  | $ | (19.8) |  |  | $ | 74.2 |  |  | $ | (10.4) |
Deferred income tax expense (benefit): |  |  |  |  |  |
Domestic |  | $ | 2.6 |  |  | $ | (26.8) |  |  | $ | 17.2 |
International |  | (2.1) |  |  | 4.5 |  |  | (18.5) |
Total deferred income tax expense (benefit) |  | $ | 0.5 |  |  | $ | (22.3) |  |  | $ | (1.3) |
Total income tax expense (benefit) |  | $ | (19.3) |  |  | $ | 51.9 |  |  | $ | (11.7) |
We elected to recognize the resulting tax on global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) as a period expense in the period in which the tax is incurred. A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate from continuing operations along with a description of significant reconciling items is included below for the twelve months ended December 31, 2022, 2021 and 2020. .
|  | 2022 |  | 2021 |  | 2020 |  |
U.S. federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  |
International tax rate differential: |  |  |  |  |  |  |  |
Asia |  | 1.1 |  |  | 0.4 |  |  | 1.2 |  |  |
Europe |  | (12.4) |  |  | (1.8) |  |  | (9.9) |  |  |
North and South America |  | 5.9 |  |  | 1.1 |  |  | 2.5 |  |  |
Total international tax rate differential |  | (5.5) |  |  | (0.3) |  |  | (6.2) |  |  |
Tax on GILTI and FDII |  | 2.8 |  |  | (1.0) |  |  | 9.8 |  |  |
International tax on certain current and prior year earnings |  | 0.2 |  |  | 2.0 |  |  | 4.4 |  |  |
Non-deductible acquisition related costs |  | 0.9 |  |  | 0.1 |  |  | 4.0 |  |  |
Research and development credit |  | (5.0) |  |  | (1.1) |  |  | (4.7) |  |  |
Capital losses |  | (88.1) |  |  | (0.6) |  |  | (29.8) |  |  |
State and local tax, net |  | (4.0) |  |  | 0.2 |  |  | (12.4) |  |  |
International permanent items |  | 15.0 |  |  | 0.2 |  |  | (10.7) |  |  |
Net impact of uncertain tax positions |  | 12.9 |  |  | 1.0 |  |  | 2.1 |  |  |
Changes in valuation allowances |  | 15.4 |  |  | 2.6 |  |  | 1.2 |  |  |
Other |  | 4.2 |  |  | 1.4 |  |  | 2.2 |  |  |
Effective income tax rate |  | (30.2) | % |  | 25.5 | % |  | (19.1) | % |  |
The effective tax rates for all periods differed from the applicable U.S. federal income tax rate as a result of permanent items, state and local income taxes, differences in international tax rates and certain other items. Permanent items primarily consist of income or expense not taxable or deductible. Significant or other items impacting the effective income tax rate are described below. 2022 Significant items We recognized a net tax benefit of $56.2 million, 88.1%, in 2022 from federal and state capital loss deductions associated with an international affiliate's tax status change. We also recognized a tax benefit of $3.5 million, 5.5%, associated with earnings in foreign jurisdictions with statutory rates below the U.S. federal income tax rate. Further, the state and local tax benefit was $2.6 million, 4.0%, driven by a U.S. tax loss. Offsetting these benefits in 2022 were international permanent items of $9.6 million, 15.0%, which primarily included an unfavorable tax effect of withholding taxes and nondeductible interest expense. In addition, we increased our valuation allowance by $9.9 million, 15.4%, for deferred tax assets that are unlikely to create income tax benefits before their expiration. Further, uncertain tax positions increased $8.1 million, 12.9%, primarily associated with European restructuring charges which are not expected to realize a tax benefit. 2021 Significant items For 2021, changes in valuation allowances of $5.3 million, 2.6%, related to losses in jurisdictions for which we do not expect to be able to realize the associated tax benefit. We also recognized $1.9 million, 1.0%, of uncertain tax positions, primarily associated with European restructuring actions taken in 2021. 2020 Significant items We recognized a tax benefit of $18.2 million, 29.8%, from a carryback of capital losses associated with an investment in a foreign affiliate. International permanent items included the favorable tax effect of notional interest deductions, favorable tax treatment of foreign exchanges losses, offset by non-deductibility of interest expense related to the receipt of tax-exempt dividends, which resulted in a net favorable tax impact of $6.5 million, 10.7%. Components of our deferred tax assets (liabilities) as of December 31, 2022 and 2021 were as follows:
(In millions) |  | 2022 |  | 2021
Deferred tax assets: |  |  |  |
Employment costs |  | 21.0 |  |  | 34.2 |
Environmental reserves |  | 29.2 |  |  | 30.9 |
Net operating loss carryforwards |  | 54.3 |  |  | 52.8 |
Operating leases |  | 11.8 |  |  | 16.1 |
Research and development |  | 39.2 |  |  | 22.0 |
Capitalized and carryforward interest |  | 18.2 |  |  | 6.3 |
Financial Derivatives |  | 16.7 |  |  | — |
Other, net |  | 54.4 |  |  | 43.7 |
Gross deferred tax assets |  | $ | 244.8 |  |  | $ | 206.0 |
Valuation allowances |  | (35.3) |  |  | (19.6) |
Total deferred tax assets, net of valuation allowances |  | $ | 209.5 |  |  | $ | 186.4 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | $ | (117.4) |  |  | $ | (47.4) |
Goodwill and intangibles |  | (337.3) |  |  | (130.6) |
Operating leases |  | (12.0) |  |  | (16.2) |
Financial Derivatives |  | — |  |  | (6.7) |
Other, net |  | (11.7) |  |  | (12.6) |
Total deferred tax liabilities |  | $ | (478.4) |  |  | $ | (213.5) |
Net deferred tax (liabilities) assets |  | $ | (268.9) |  |  | $ | (27.1) |
Consolidated Balance Sheets: |  |  |  |
Non-current deferred income tax assets |  | $ | 73.6 |  |  | $ | 73.5 |
Non-current deferred income tax liabilities |  | $ | (342.5) |  |  | $ | (100.6) |
As of December 31, 2022, we had gross state net operating loss carryforwards of $17.5 million that expire between 2023 and 2038 or that have indefinite carryforward periods. Various international subsidiaries have gross net operating loss carryforwards totaling $201.9 million that expire between 2023 and 2039 or that have indefinite carryforward periods. Total tax valuation allowances increased $15.7 million from the prior year primarily due to the acquisition of APM, $6.3 million, and losses incurred related to European restructurings that are not expected to generate realizable income tax benefits. We have provided valuation allowances of $19.6 million against certain international and state net operating loss carryforwards that, as of this time, are expected to expire prior to utilization. As of December 31, 2022, no tax provision has been made on approximately $532.0 million of undistributed earnings of certain non-U.S. subsidiaries as these amounts continue to be indefinitely reinvested consistent with our policy. Additionally, no deferred income taxes were recorded on taxable outside basis differences as it was not practicable to determine the tax provision impact. The ending balance of international tax on certain current and prior year earnings accrual as of December 31, 2022 and 2021 included in the Other, net deferred tax liabilities line in the table above are $7.4 million and $10.1 million, respectively. We made worldwide income tax payments of $109.7 million, $102.1 million, and $188.8 million in 2022, 2021, and 2020, respectively. We received refunds of $29.4 million, $12.6 million, and $9.9 million in 2022, 2021, and 2020, respectively. The Company records tax provisions for uncertain tax positions in accordance with FASB ASC Topic 740, Income Taxes. A reconciliation of unrecognized tax benefits is as follows:
|  | Unrecognized Tax Benefits
(In millions) |  | 2022 |  | 2021 |  | 2020
Balance as of January 1, |  | $ | 19.8 |  |  | $ | 9.5 |  |  | $ | 11.2 |
Increases as a result of positions taken during current year |  | 10.6 |  |  | 5.9 |  |  | 0.6 |
Increases as a result of positions taken for prior years |  | 0.4 |  |  | 0.2 |  |  | 0.6 |
Balance related to acquired businesses |  | — |  |  | 5.4 |  |  | — |
Reductions for tax positions of prior years |  | (4.3) |  |  | — |  |  | — |
Decreases as a result of lapse of statute of limitations |  | (0.6) |  |  | (1.5) |  |  | (0.5) |
Decreases relating to settlements with taxing authorities |  | — |  |  | (0.1) |  |  | (2.8) |
Other, net |  | (0.5) |  |  | 0.4 |  |  | 0.4 |
Balance as of December 31, |  | $ | 25.4 |  |  | $ | 19.8 |  |  | $ | 9.5 |
We recognize interest and penalties related to uncertain tax positions in the tax provision. As of December 31, 2022 and 2021, we had $1.5 million and $1.2 million accrued for interest and penalties, respectively. We expect tax settlements, if any, during the next twelve months to be immaterial to our unrecognized tax benefit accruals. If all unrecognized tax benefits were recognized, the net impact on the tax provision would be a benefit of $18.1 million. The Company is currently being audited by U.S. federal, state and international taxing jurisdictions. With limited exceptions, we are no longer subject to U.S. federal, state and international tax examinations for periods preceding 2017.

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