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INCOME TAXES | 12 Months Ended
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Oct. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The provision for income taxes consists of the following:
| Year Ended October 31,
(in millions) | 2023 |  | 2022 |  | 2021
Current |  |  |  |  |
Federal | $ | 77.4 |  |  | $ | 54.6 |  |  | $ | 45.0 |
State and local | 19.6 |  |  | 19.9 |  |  | 15.5 |
Non-U.S. | 49.1 |  |  | 49.2 |  |  | 56.3 |
Total Current | 146.1 |  |  | 123.7 |  |  | 116.8 |
Deferred |  |  |  |  |
Federal | (18.8) |  |  | 12.5 |  |  | (33.0) |
State and local | (8.6) |  |  | (6.6) |  |  | (9.9) |
Non-U.S. | (0.9) |  |  | 7.5 |  |  | (4.3) |
Total Deferred | (28.3) |  |  | 13.4 |  |  | (47.2) |
Tax expense | $ | 117.8 |  |  | $ | 137.1 |  |  | $ | 69.6 |
The U.S. income before income tax expense was $240.7 million, $333.5 million and $239.3 million in 2023, 2022 and 2021, respectively. The non-U.S. income before income tax expense was $254.0 million, $192.2 million and $239.2 million in 2023, 2022 and 2021, respectively. The following is a reconciliation of the provision for income taxes based on the federal statutory rate to the Company’s effective income tax rate:
| Year Ended October 31,
| 2023 |  | 2022 |  | 2021
Federal statutory rate | 21.00 | % |  | 21.00 | % |  | 21.00 | %
Impact of foreign tax rate differential | 1.78 | % |  | 2.03 | % |  | 0.70 | %
State and local taxes, net of federal tax benefit | 1.71 | % |  | 2.01 | % |  | 0.93 | %
Net impact of changes in valuation allowances | (2.21) | % |  | (1.05) | % |  | (2.57) | %
Permanent book-tax differences | (0.25) | % |  | 1.60 | % |  | 0.86 | %
Withholding taxes | 2.95 | % |  | 2.33 | % |  | 2.86 | %
Tax credits | (1.40) | % |  | (0.99) | % |  | (1.57) | %
Capital losses | — | % |  | — | % |  | (5.70) | %
Other items, net | 0.23 | % |  | (0.84) | % |  | (1.99) | %
Company’s effective income tax rate | 23.81 | % |  | 26.09 | % |  | 14.52 | %
The primary items which increased the Company’s effective income tax rate from the federal statutory rate in 2023 were changes in the mix of earnings among tax jurisdictions, including jurisdictions for which valuation allowances have been recorded, state and local taxes and withholding taxes. The increases were partially offset by tax credits and release of valuation allowances. The primary items which increased the Company’s effective income tax rate from the federal statutory rate in 2022 were changes in the mix of earnings among tax jurisdictions, including jurisdictions for which valuation allowances have been recorded, state and local taxes, withholding taxes and the net $58.6 million book loss recorded for the FPS Divestiture and other disposals of businesses for which limited tax benefits were available. The increases were partially offset by decreases in valuation allowances and recording additional capital losses which are expected to be fully utilized. The primary items which decreased the Company’s effective income tax rate from the federal statutory rate in 2021 were capital losses, which were expected to reduce capital gains resulting from the sale of timberland; releases of unrecognized tax benefits as a result of the expiration of statute of limitations; decreases in valuation allowances; and other favorable return to provision adjustments and audit settlements. These reductions were offset by an increase in withholding taxes and other immaterial items. The components of the Company’s deferred tax assets and liabilities as of October 31 for the years indicated were as follows:
(in millions) | 2023 |  | 2022
Deferred tax assets |  |  |
Net operating loss and other carryforwards | $ | 104.9 |  |  | $ | 101.8 |
Incentive liabilities | 18.6 |  |  | 28.6 |
Operating lease liabilities | 70.3 |  |  | 65.5 |
Other reserves | 16.0 |  |  | 13.0 |
Research and development expenses | 29.7 |  |  | — |
Other | 45.4 |  |  | 52.8 |
Total deferred tax assets | 284.9 |  |  | 261.7 |
Valuation allowance | (97.3) |  |  | (105.4) |
Net deferred tax assets | $ | 187.6 |  |  | $ | 156.3 |
Deferred tax liabilities |  |  |
Properties, plants and equipment | $ | 157.2 |  |  | $ | 138.4 |
Operating lease assets | 70.3 |  |  | 65.5 |
Timberland transactions | 51.6 |  |  | 51.8 |
Goodwill and other intangible assets | 150.6 |  |  | 174.0 |
Pension liabilities | 10.6 |  |  | 8.4 |
Other | 50.0 |  |  | 51.7 |
Total deferred tax liabilities | 490.3 |  |  | 489.8 |
Net deferred tax liability | $ | 302.7 |  |  | $ | 333.5 |
As of October 31, 2023 and 2022, the Company had deferred income tax benefits of $104.9 million and $101.8 million, respectively, from net operating losses and other tax credit carryforwards. For the fiscal year ended October 31, 2023, these losses and carryforwards consist of $7.5 million, $10.1 million and $87.3 million in U.S. Federal, U.S. state and non-U.S. jurisdictions, respectively. For the fiscal year ended October 31, 2022, these losses and carryforwards consist of $4.4 million, $12.2 million and $85.2 million in U.S. Federal, U.S. state and non-U.S. jurisdictions, respectively. The Company has recorded valuation allowances of $82.8 million and $92.4 million against non-U.S. deferred tax assets as of October 31, 2023 and 2022, respectively. The Company has also recorded valuation allowances against U.S. deferred tax assets of $14.5 million and $13.0 million, as of October 31, 2023 and 2022, respectively. The Company had net changes in valuation allowances in 2023 of $8.1 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions) | 2023 |  | 2022 |  | 2021
Balance of unrecognized tax benefit at November 1 | $ | 24.3 |  |  | $ | 31.0 |  |  | $ | 36.0 |
Increases in tax positions for prior years | 0.6 |  |  | 0.2 |  |  | 1.2 |
Increases in tax positions for current years | 4.1 |  |  | 5.9 |  |  | 1.7 |
Lapse in statute of limitations | (4.6) |  |  | (11.4) |  |  | (8.0) |
Currency translation | (1.0) |  |  | (1.4) |  |  | 0.1 |
Balance at October 31 | $ | 23.4 |  |  | $ | 24.3 |  |  | $ | 31.0 |
The 2023 net decrease in unrecognized tax benefits is primarily related to decreases in unrecognized tax benefits related lapses in statute of limitations. The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various non-U.S. jurisdictions and is subject to audit by various taxing authorities for 2015 through the current year. The Company has completed its U.S. federal tax audit for the tax years through 2016, and the statues of limitations have expired for years 2017 through 2019. The October 31, 2023, 2022, 2021 balances include $23.4 million, $24.3 million and $31.0 million, respectively, of unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate. The Company also recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense net of tax, as applicable. As of October 31, 2023 and 2022, the Company had accrued for the payment of interest and penalties in the amounts of $4.8 million and $4.8 million, respectively. The Company has estimated the reasonably possible expected net change in unrecognized tax benefits through October 31, 2023 under ASC 740, “Income Taxes.” The Company’s estimate is based on lapses of the applicable statutes of limitations, settlements and payments of uncertain tax positions. Though actual results may materially differ, the estimated net decrease in unrecognized tax benefits for the next 12 months could be up to $6.7 million.

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