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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income Statement Components

The jurisdictional components of income before taxes consist of the following:
 December 31,
(in thousands)202020192018
Income before income taxes:   
Domestic$49,357 $54,566 $66,858 
Foreign28,780 29,769 27,673 
 $78,137 $84,335 $94,531 
 
The components of income tax expense (benefit) consist of the following:
 December 31,
(in thousands)202020192018
Current:   
Domestic$10,823 $6,403 $6,771 
Foreign8,759 8,419 7,391 
State3,226 3,291 4,831 
 22,808 18,113 18,993 
Deferred:      
Domestic674 3,800 2,542 
Foreign(1,199)(280)(390)
State(776)(204)(100)
 (1,301)3,316 2,052 
Total income taxes$21,507 $21,429 $21,045 
     
The difference between income tax expense (benefit) for financial statement purposes and the amount of income tax expense computed by applying the domestic statutory income tax rate of 21% to income before income taxes consists of the following:
 
 December 31,
(in thousands)202020192018
Income tax expense at statutory rates
$16,409 $17,710 $19,851 
Increase (reduction) from:   
Jurisdictional rate differences1,034 988 719 
Valuation allowance(63)460 (267)
Stock based compensation(366)(358)(205)
U.S. state taxes2,450 3,125 3,917 
Foreign tax expense704 — — 
R&D credit (415)(699)(531)
GILTI50 872 673 
Previously unrecognized tax (benefit)/expense2,219 (1,504)— 
Other, net(515)835 219 
Provision for income taxes before tax reform$21,507 $21,429 $24,376 
Effective tax rate before effects of tax reform28 %25 %26 %
  Tax Reform:
       Rate change of deferreds— — 1,200 
       Transition tax on deemed repatriation — — (4,531)
Impact of tax reform$— $— $(3,331)
Provision for income tax$21,507 $21,429 $21,045 
Effective tax rate28 %25 %22 %
 
Deferred Income Tax Assets and Liabilities

Deferred income taxes arise from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The components of the Company’s deferred income tax assets and liabilities consist of the following:
 December 31,
(in thousands)20202019
Deferred income tax assets:  
  Inventory basis difference$3,150 $4,351 
  Accounts receivable reserve255 384 
  Rental equipment and Property, plant and equipment 144 73 
  Stock based compensation606 391 
  Pension liability3,655 2,874 
  Employee benefit accrual1,585 1,669 
  Product liability and warranty reserves2,242 2,526 
  Foreign net operating loss3,566 4,485 
  Lease liability3,376 3,046 
  State net operating loss148 148 
  Other2,430 190 
             Total deferred income tax assets$21,157 $20,137 
              Less: Valuation allowance(3,641)(4,156)
                 Net deferred income tax assets$17,516 $15,981 
  
Deferred income tax liabilities:  
  Inventory basis differences$(287)$(122)
  Rental equipment and Property, plant and equipment (14,818)(17,327)
  Lease asset(3,351)(3,022)
  Intangible assets(16,496)(18,897)
  Expenses not currently deductible for book purposes(1,003)(1,996)
            Total deferred income tax liabilities$(35,955)$(41,364)
                 Net deferred income taxes$(18,439)$(25,383)
 
As of December 31, 2020, the Company had foreign deferred tax assets consisting of foreign net operating losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign jurisdictions’ net operating loss carry-forwards are approximately $11.1 million with an unlimited carry-forward period, and $0.9 million with a carry-forward expiring in 2035. The Company also has U.S. state net operating loss carry-forwards in the amount of $3.6 million which will expire between 2021 and 2030.

We have recorded a valuation allowance as of December 31, 2020 and 2019 due to uncertainties related to our ability to utilize some of the deferred income tax assets, primarily consisting of international operating losses and foreign tax credits generated by the transition tax, before they expire. The valuation allowance is based on estimates of taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. Related to the utilization of net operating loss carry forwards utilized to offset current year earnings, there is not a sufficient history of earnings to fully release the valuation allowances at this time.
Unrecognized Tax Benefits

Unrecognized tax benefits in the amount of $0.3 million and $0.3 million for 2020 and 2019, respectively, are included in other non-current liabilities on the balance sheet. The unrecognized tax benefits, if recognized, would favorably impact our effective tax rate in a future period. We do not expect our unrecognized tax benefits disclosed above to change significantly over the next 12 months.
 
Unrecognized Tax Benefits
 December 31,
(in thousands)20202019
Balance as of beginning of year$262 $236 
Increases for tax positions related to the current year88 88 
Increases in tax positions taken related to liabilities assumed in acquisitions— 2,219 
Decreases in tax positions taken related to liabilities assumed in acquisitions— (1,504)
Decreases as a result of settlements with taxing authorities related to liabilities assumed in acquisitions— (715)
Decreases due to lapse of statute of limitations(88)(62)
Balance as of end of year$262 $262 

The Company adopted the policy to include interest and penalty expense related to income taxes as interest and other expense, respectively. As of December 31, 2020, no interest or penalties has been accrued. The Company’s open tax years for its federal and state income tax returns are for the tax years ended 2015 through 2020. The Company’s open tax years for its foreign income tax returns are for the tax years ended 2013 through 2020. The Company is currently under audit with the state of Michigan.

As a result of the fundamental changes to the taxation of multinational corporations created by TCJA, we no longer intend to permanently reinvest all of the historical undistributed earnings of our foreign affiliates. We will distribute earnings from our European subsidiaries, while maintaining our permanent reinvestment for our other foreign subsidiaries. There will generally be no U.S. corporate taxes imposed on such future distributions of the earnings or withholding and other local taxes. For the amounts we continue to assert permanent reinvestment, if the amounts were distributed, the company would be subject to approximately $4.2 million in withholding taxes.