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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
The components of pre-tax book income (loss) consist of the following:
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
U.S. | $ | (15.8 | ) |  | $ | (39.7 | ) |  | $ | 26.8 |
Foreign | (69.7 | ) |  | (30.9 | ) |  | 28.6 |
Total | $ | (85.5 | ) |  | $ | (70.6 | ) |  | $ | 55.4 |
Significant components of income tax expense consist of the following:
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
U.S. federal current expense (benefit) | — |  |  | 0.0 |  |  | $ | (0.1 | )
State current expense (benefit) | (0.1 | ) |  | (1.1 | ) |  | 1.2 |
Foreign current expense | 0.1 |  |  | 0.8 |  |  | 12.3 |
Total current expense (benefit) | (0.0 | ) |  | (0.3 | ) |  | 13.4 |
Deferred: |  |  |  |  |  |  |  |
U.S. federal deferred benefit | (2.2 | ) |  | (1.6 | ) |  | (2.5 | )
State deferred benefit | (0.2 | ) |  | — |  |  | (0.0 | )
Foreign deferred tax expense (benefit) | (6.0 | ) |  | 1.7 |  |  | (3.3 | )
Total deferred expense (benefit) | (8.4 | ) |  | 0.1 |  |  | (5.8 | )
Total income tax expense (benefit) | $ | (8.4 | ) |  | $ | (0.2 | ) |  | $ | 7.6 |
A reconciliation of the statutory U.S. Federal income tax rate to the effective income tax rate on income (loss) is as follows:
| 2019 |  | 2018 |  | 2017
Federal Statutory Rate | 21.0 | % |  | 21.0 | % |  | 35.0 | %
Permanent differences | (13.1 | ) |  | (25.7 | ) |  | 57.5 |
State taxes, net of Federal benefit | (0.1 | ) |  | 3.5 |  |  | (6.6 | )
Rate change | (3.5 | ) |  | (0.6 | ) |  | 370.5 |
Foreign earnings taxed at different rates than U.S. | (3.3 | ) |  | 11.8 |  |  | (40.5 | )
Valuation allowance | 72.8 |  |  | 81.2 |  |  | (401.4 | )
Transition tax | — |  |  | (13.8 | ) |  | — |
Net operating loss expiration and remeasurement | (66.2 | ) |  | (75.8 | ) |  | — |
Changes in uncertain tax reserves | 1.2 |  |  | (1.4 | ) |  | 3.8 |
Other | 1.0 |  |  | 0.1 |  |  | (4.6 | )
Effective tax rate | 9.8 | % |  | 0.3 | % |  | 13.7 | %
The effective tax rate for each of the years ending December 31, 2019 and December 31, 2018 was lower than the statutory US tax rate of 21% primarily as a result of the non-recognition of current year domestic and foreign losses. For the period ending December 31, 2017, the Company’s U.S. deferred tax asset and related valuation allowance decreased by $205.2 million as a result of the Tax Cuts and Jobs Act (the "Act") in 2017. The Act made significant changes to various areas of U.S. federal income tax law. As the U.S. deferred tax asset had a full valuation allowance, this change in rate from 35% to 21% as a result of the Act had no impact on the Company’s financial position or results of operations. The increase in permanent differences is a result of tax law changes related to our foreign operations. The effect of earnings of foreign subsidiaries includes the difference between the U.S. statutory rate and local jurisdiction tax rates. On January 1, 2019, the Company adopted ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which provides for the reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects resulting from the Act. In accordance with the provisions of the ASU, $1.3 million of stranded tax effects related to the Act were reclassified from accumulated other comprehensive loss to retained earnings in the first quarter of 2019. This reclassification includes the impact of the change in the federal corporate income tax rate and the related federal benefit of state taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of our deferred tax assets and liabilities as of December 31 are as follows:
| 2019 |  | 2018
Deferred tax assets: |  |  |
Accrued postretirement benefit cost | $ | 39.3 |  |  | $ | 40.3 |
Accrued liabilities | 10.8 |  |  | 10.9 |
Share-based compensation | 0.9 |  |  | 2.1 |
Goodwill | — |  |  | 0.4 |
Net operating losses and tax credits | 432.8 |  |  | 482.8 |
Foreign basis differences | 15.0 |  |  | 13.5 |
Ravenswood retiree legal settlement | 1.9 |  |  | 2.4 |
Other | 2.8 |  |  | 1.9 |
Total deferred tax assets | 503.5 |  |  | 554.3 |
Valuation allowance | (492.4 | ) |  | (552.5 | )
Net deferred tax assets | $ | 11.1 |  |  | $ | 1.8 |
Deferred tax liabilities: |  |  |  |  |
Derivatives | $ | (3.5 | ) |  | $ | — |
Tax over financial statement depreciation | $ | (102.4 | ) |  | (103.9 | )
Total deferred tax liabilities | (105.9 | ) |  | (103.9 | )
Net deferred tax liability | $ | (94.8 | ) |  | $ | (102.1 | )
We regularly assess the likelihood that deferred tax assets will be recovered from future taxable income. To the extent we believe that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established. When a valuation allowance is established or increased, an income tax charge is included in the consolidated statement of operations and net deferred tax assets are adjusted accordingly. Future changes in tax laws, statutory tax rates and taxable income levels could result in actual realization of the deferred tax assets being materially different from the amounts provided for in the consolidated financial statements. If the actual recovery amount of the deferred tax asset is less than anticipated, we would be required to write-off the remaining deferred tax asset and increase the tax provision. We have a valuation allowance of $492.4 million recorded for all of our U.S. deferred tax assets, and a portion of our Icelandic deferred tax assets as of December 31, 2019. The Company is subject to the provisions of ASC 740-10, Income Taxes, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. The overall reduction in deferred tax assets, and the related valuation allowances, are primarily a result of the enactment of the Act in 2017, the expiration of certain foreign net operating loss carryforwards ("NOLs"), and state tax law changes that impacted our State NOLs. The changes in the valuation allowance are as follows:
| 2019 |  | 2018 |  | 2017
Beginning balance, valuation allowance | $ | 552.5 |  |  | $ | 607.8 |  |  | $ | 839.1 |
Remeasurement of deferred tax assets | (41.6 | ) |  | (32.1 | ) |  | (205.2 | )
Release of valuation allowance | — |  |  | — |  |  | — |
Expiration of net operating losses | (10.8 | ) |  | (12.3 | ) |  | — |
Other change in valuation allowance | (7.7 | ) |  | (11.0 | ) |  | (26.1 | )
Ending balance, valuation allowance | $ | 492.4 |  |  | $ | 552.5 |  |  | $ | 607.8 |
The significant components of our NOLs are as follows:
| 2019 |  | 2018
Federal (1) | $ | 1,519.9 |  |  | $ | 1,470.4 |
State (2) | 1,068.3 |  |  | 2,205.0 |
Foreign (3) | 306.8 |  |  | 398.2 |
(1) | The federal NOL begins to expire in 2028.
(2) | The state NOLs begin to expire in 2027.
(3) | The Icelandic NOL expires between 2020 and 2026; the Netherlands NOL begins to expire in 2022.
Our ability to utilize our deferred tax assets to offset future federal taxable income may be significantly limited if we experience an "ownership change" as defined in the Code. In general, an ownership change would occur if our "five-percent shareholders," as defined under the Code, collectively increase their ownership in us by more than 50 percentage points over a rolling three-year period. Future transactions in our stock that may not be in our control may cause us to experience such an ownership change and thus limit our ability to utilize net operating losses, tax credits and other tax assets to offset future taxable income. A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest) is as follows:
| 2019 |  | 2018 |  | 2017
Balance as of January 1, | $ | 9.5 |  |  | $ | 8.4 |  |  | $ | 6.4 |
Additions based on tax positions related to the current year | — |  |  | 2.0 |  |  | 2.1 |
Decreases due to lapse of applicable statute of limitations | (1.3 | ) |  | (0.9 | ) |  | (0.1 | )
Settlements | — |  |  | — |  |  | — |
Balance as of December 31, | $ | 8.2 |  |  | $ | 9.5 |  |  | $ | 8.4 |
Included in the above balances are tax positions relating to temporary differences where there is uncertainty about the timing of tax return inclusion, but not that the amounts will ultimately be tax deductible. Because of the impact of deferred tax accounting, other than interest and penalties, the timing would not impact the annual effective tax rate but could accelerate the payment of cash to the taxing authority to an earlier period. The remaining amounts of unrecognized tax benefits would affect our effective tax rate if recognized. It is our policy to recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. The components of our unrecognized tax benefits are as follows:
| 2019 |  | 2018 |  | 2017
Unrecognized tax benefits - Temporary Differences | $ | 6.8 |  |  | $ | 7.9 |  |  | $ | 8.3 |
Other unrecognized tax benefits | 1.4 |  |  | 1.6 |  |  | 0.1 |
Gross unrecognized tax benefits | $ | 8.2 |  |  | $ | 9.5 |  |  | $ | 8.4 |
Accrued interest and penalties related to unrecognized tax benefits | $ | — |  |  | $ | 0.1 |  |  | $ | — |
We do not expect a significant change in the balance of unrecognized tax benefits within the next twelve months. Century and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and several foreign jurisdictions. Our federal income tax returns have been reviewed by the IRS through 2010. However, we have NOLs beginning in 2008 that are available for carryforward to future years. Under U.S. tax law, NOLs may be adjusted by the IRS until the statute of limitations expires for the year in which the NOL is used. Accordingly, our 2008 and later NOLs may be reviewed until they are used or expire. Material state and local income tax matters have been concluded for years through 2016. Our Icelandic tax returns are subject to examination beginning with the 2014 tax year.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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