The following is a reconciliation of our effective tax rate to the federal statutory tax rate:

	Years Ended December 31,
	2019				2018				2017
U.S. federal statutory rate		21.0		%		21.0		%		34.9		%
Federal tax law changes		0.0				0.5				(112.2	)
State taxes, net of federal benefit		3.5				3.7				2.8
Federal and state incentives		(0.9	)			(0.9	)			(7.0	)
State law changes		0.7				-				2.0
Permanent differences		1.2				0.6				0.2
Net effective rate		25.5		%		24.9		%		(79.3	)	%

	Years Ended December 31,
	2019			2018			2017
Current
Federal	$	31,209		$	(13,750	)	$	(10,426	)
State and local		3,979			1,740			1,542
Foreign		84			(234	)		59
		35,272			(12,244	)		(8,825	)

Deferred
Federal		(344	)		36,968			(46,922	)
State and local		1,788			4,134			2,667
Foreign		(17	)		206			(3	)
		1,427			41,308			(44,258	)

Total provision	$	36,699		$	29,064		$	(53,083	)

The following is a summary of our deferred tax assets and liabilities (in thousands):

	December 31,
	2019			2018
Accrued compensation		13,153			10,538
Other reserves		10,297			8,568
Tax credit carryforwards		6,669			5,062
Operating loss carryforwards		4,879			6,914
Lease accounting liability		10,195			-
Total gross deferred income taxes		45,193			31,082
Valuation allowances		(4,713	)		(3,128	)
Total deferred tax assets		40,480			27,954

Prepaids		(4,774	)		(5,409	)
Other receivables		(656	)		(1,588	)
Property and equipment		(124,964	)		(119,716	)
Goodwill		(55,195	)		(55,118	)
Lease right-of-use asset		(10,195	)		-
Total deferred tax liabilities		(195,784	)		(181,831	)

Total deferred taxes	$	(155,304	)	$	(153,877	)

We are subject to income taxation in the U.S., numerous state jurisdictions, Mexico and Canada. Because income tax return formats vary among the states, we file both unitary and separate company state income tax returns. We do not permanently reinvest our foreign earnings, all amounts are accrued and accounted for, though not material.

We acquired a federal net operating loss carryforward of $4.1 million through our acquisition of CaseStack in December 2018. IRS loss limitation rules allowed us to utilize $1.3 million in 2019. The remaining net operating loss of $2.8 million has no expiration date. Our state tax net operating losses total $2.1 million. Some of those state losses have no expiration date while others will expire between December 31, 2020 and December 31, 2038. Management believes it is more likely than not that the loss carryforward deferred tax assets will be realized, except for sixty-nine thousand dollars of state losses. A valuation allowance of sixty-nine thousand dollars has been established.

Our federal incentive tax credit carryforward of eighty-eight thousand dollars expires between December 31, 2025 and December 31, 2028. Our state incentive tax credit carryforwards of $6.6 million expire between December 31, 2020 and December 31, 2024. Management believes it is more likely than not that the incentive carryforward deferred tax assets will be realized, except for $4.6 million of state tax credits. A valuation allowance of $4.6 million has been established.

As of December 31, 2019 and December 31, 2018, the amount of unrecognized tax benefits was $4.1 million and $3.9 million, respectively. Of these amounts, our income tax provision would decrease $3.4 million and $3.3 million, respectively, if recognized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2019			2018
Gross unrecognized tax benefits - beginning of the year	$	3,894		$	3,827
Gross increases (decreases) related to prior year tax positions		74			(397	)
Gross increases related to current year tax positions		506			959
Lapse of applicable statute of limitations		(405	)		(495	)
Gross unrecognized tax benefits - end of year	$	4,069		$	3,894

We estimate it is reasonably possible that our reserve could either increase or decrease by up to $1.0 million during the next twelve months.

We recognize interest expense and penalties related to income tax liabilities in our provision for income taxes. These amounts have been immaterial for the last three years.

In 2019, CaseStack’s federal tax return for 2016, a pre-acquisition tax year, was selected for examination by the IRS. The audit closed with no additional tax due. In 2018, Massachusetts started an audit that closed in 2019 with a refund of one thousand dollars. The Wisconsin audit of our 2014 through 2016 tax years that started in 2018 is still ongoing.