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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax provision (benefit) from continuing operations consists of the following:
| Year ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 23,333 |  |  | $ | (42,718) |  |  | $ | 1,162 |
State and local | 4,934 |  |  | (748) |  |  | 740 |
Foreign | 760 |  |  | 6,731 |  |  | 3,687 |
| 29,027 |  |  | (36,735) |  |  | 5,589 |
Deferred: |  |  |  |  |
Federal | (3,687) |  |  | 28,665 |  |  | 1,999 |
State and local | 819 |  |  | 1,180 |  |  | 1,952 |
Foreign | 3,069 |  |  | (4,020) |  |  | (395) |
| 201 |  |  | 25,825 |  |  | 3,556 |
Total: |  |  |  |  |
Federal | 19,646 |  |  | (14,053) |  |  | 3,161 |
State and local | 5,753 |  |  | 432 |  |  | 2,692 |
Foreign | 3,829 |  |  | 2,711 |  |  | 3,292 |
| $ | 29,228 |  |  | $ | (10,910) |  |  | $ | 9,145 |
Income (loss) before income taxes from continuing operations consists of the following:
| Year ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
U.S. | $ | 143,712 |  |  | $ | (38,319) |  |  | $ | 8,159 |
Foreign | 17,058 |  |  | 11,238 |  |  | 4,862 |
| $ | 160,770 |  |  | $ | (27,081) |  |  | $ | 13,021 |
A reconciliation from the statutory U.S. federal tax rate to the effective tax rate follows:
| Year ended December 31,
| 2021 |  | 2020 |  | 2019
Statutory U.S. federal tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) in rate resulting from: |  |  |  |  |
State and local income taxes, net of related federal taxes | 2.5 |  |  | 0.5 |  |  | 15.8 |
Federal tax rate differential | 0.4 |  |  | (2.1) |  |  | 2.0 |
U.S. tax rate change and other tax law impacts (a) | 0.5 |  |  | 56.2 |  |  | 4.5 |
Effect of noncontrolling interest | (4.2) |  |  | (17.0) |  |  | 5.2 |
Derivative instruments and hedging activities | 0.4 |  |  | (11.8) |  |  | (5.4) |
U.S. income taxes on foreign earnings | 0.7 |  |  | (1.8) |  |  | 11.1 |
Nondeductible compensation | 1.9 |  |  | (5.5) |  |  | 10.0 |
Unrecognized tax benefits | 2.1 |  |  | (72.2) |  |  | 146.7 |
Valuation allowance | 0.1 |  |  | (1.9) |  |  | (2.0) |
Foreign tax credits | (1.3) |  |  | (0.5) |  |  | (10.8) |
Research and development and other tax credits | (5.0) |  |  | 75.6 |  |  | (189.4) |
Equity method investments | (0.6) |  |  | (0.1) |  |  | 12.2 |
Acquisition related permanent item | — |  |  | — |  |  | 51.8 |
Other, net | (0.3) |  |  | (0.1) |  |  | (2.5) |
Effective tax rate | 18.2 | % |  | 40.3 | % |  | 70.2 | %
(a) Reflects the impact of the CARES Act which provided a financial statement benefit of $14.8 million in 2020. Net income taxes of $51.7 million, $2.4 million and $2.0 million were paid in the years ended December 31, 2021, 2020 and 2019, respectively. TAMH and ELEMENT are treated as partnerships for U.S. tax purposes. Partnerships are not taxable entities so the tax consequences of the partnership’s transactions flow through to the partners (i.e., investors) at their proportionate share. As a result, the Consolidated Financial Statements do not reflect such income taxes on income (loss) before taxes attributable to the noncontrolling interest in the partnerships. The Company has elected to treat Global Intangible Low Tax Income (“GILTI”) as a period cost and, therefore, has not recognized deferred taxes for basis differences that may reverse as GILTI tax in future years. For the years ended December 31, 2021 and 2020, the Company has not recognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries that were deemed permanently reinvested. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing and if/when remittance occurs. A deferred tax liability will be recognized if and when the Company no longer plans to permanently reinvest these undistributed earnings. Significant components of the Company's deferred tax liabilities and assets are as follows:
| December 31,
(in thousands) | 2021 |  | 2020
Deferred tax liabilities: |  |  |
Property, plant and equipment and Rail assets leased to others | $ | (66,913) |  |  | $ | (203,432) |
Identifiable intangibles | (7,022) |  |  | (9,677) |
Investments | (35,842) |  |  | (50,244) |
Other | (3,859) |  |  | (3,427) |
| (113,636) |  |  | (266,780) |
Deferred tax assets: |  |  |
Employee benefits | 27,695 |  |  | 20,910 |
Accounts and notes receivable | 2,189 |  |  | 4,207 |
Inventory | 4,533 |  |  | 1,905 |
Federal income tax credits | 2,292 |  |  | 25,163 |
Net operating loss carryforwards | 2,906 |  |  | 25,427 |
Derivative instruments | 1,774 |  |  | 5,949 |
Lease liability | 64 |  |  | 9,068 |
Other | 5,426 |  |  | 5,456 |
Total deferred tax assets | 46,879 |  |  | 98,085 |
less: Valuation allowance | 2,834 |  |  | 1,452 |
| 44,045 |  |  | 96,633 |
Net deferred tax liabilities(a) | $ | (69,591) |  |  | $ | (170,147) |
(a) The Company had deferred tax assets of $1.5 million included in Other assets in the Consolidated Balance Sheets as of December 31, 2021. On December 31, 2021, the Company had $30.7 million and $4.7 million of state and non-U.S. net operating loss carryforwards that begin to expire in 2022 and 2035, respectively. The Company also has $2.3 million of U.S. foreign tax credits ("FTCs") carryforwards that begin to expire after 2028. The valuation allowance of $2.8 million is related to tax assets of $2.3 million and $0.5 million for U.S. federal FTCs and net operating loss carryforwards, respectively. The decrease in net deferred tax liabilities of $100.5 million during the year ended December 31, 2021 was primarily related to a decrease in deferred tax liabilities related to the sale of the Company’s Rail Leasing business during the third quarter of 2021 which are reflected in the Consolidated statements of operations as discontinued operations, net of income taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance will be recorded to reduce deferred tax assets if, based on all available evidence, it is considered more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. In assessing the realizability of our deferred tax assets, we consider positive and negative evidence, including historical operating results, future reversals of existing taxable temporary differences, projected future earnings, and tax planning strategies. The Company, or one of its subsidiaries, files income tax returns in the U.S., multiple foreign, state and local jurisdictions. The Company is no longer subject to examination by taxing authorities in the U.S., foreign, state and local jurisdictions federal taxation for years before 2014. The Company and the Company’s subsidiary partnership returns are under federal tax examination by the Internal Revenue Service (“IRS”) for the tax year 2018 and tax years 2015 through 2018, respectively. The Company’s subsidiary is under federal tax examination by the Mexican tax authorities for tax year 2015. Due to the potential for resolution of U.S. federal, foreign, state and local examinations, and the expiration of various statutes of limitations, it is reasonably possible that the gross unrecognized tax benefits may change within the next 12 months by a range of zero to $2.0 million. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
(in thousands) | 2021 |  | 2020 |  | 2019
Balance at beginning of period | $ | 44,401 |  |  | $ | 22,415 |  |  | $ | 618 |
Tax positions related to the current year |  |  |  |  |
Gross additions | 13,179 |  |  | 11,598 |  |  | 1,766 |
Tax positions related to prior years |  |  |  |  |
Gross additions | 1,364 |  |  | 12,013 |  |  | 20,649 |
Gross reductions | (7,190) |  |  | (1,566) |  |  | (155) |
Lapse in statute of limitations | — |  |  | (59) |  |  | (463) |
Balance at end of period | $ | 51,754 |  |  | $ | 44,401 |  |  | $ | 22,415 |
As of December 31, 2021, 2020 and 2019, if our unrecognized tax benefits were recognized in future periods, they would favorably impact our effective tax rate. As of December 31, 2021, unrecognized tax benefits of $51.7 million include $43.0 million associated with the federal and state R&D Credits. The Company’s practice is to recognize interest and penalties on uncertain tax positions in the provision for income taxes in the Consolidated Statement of Operations. At December 31, 2021, 2020, and 2019, the Company recorded reserves of $2.7 million, $1.8 million and $2.1 million, respectively, of interest and penalties on uncertain tax positions in the Consolidated Balance Sheets.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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