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Income Tax Matters | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Matters | Income Tax Matters The following table presents Income before income taxes by geographic area for the periods presented (in millions of dollars):
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Domestic | $ | 76.3 |  |  | $ | 114.6 |  |  | $ | 127.9 |
Foreign | 4.1 |  |  | 5.4 |  |  | 5.1 |
Income before income taxes | $ | 80.4 |  |  | $ | 120.0 |  |  | $ | 133.0 |
Tax Provision. Income taxes are classified as either domestic or foreign based on whether payment is made or due to the United States or a foreign country. Certain income classified as foreign is also subject to domestic income taxes. Income tax provision consisted of the following for the periods presented (in millions of dollars):
| Federal |  | Foreign |  | State |  | Total
Year Ended December 31, 2019 |  |  |  |  |  |  |  |  |  |  |
Current | $ | 5.7 |  |  | $ | (1.1 | ) |  | $ | (1.8 | ) |  | $ | 2.8 |
Deferred | (19.6 | ) |  | (0.3 | ) |  | (4.5 | ) |  | (24.4 | )
Benefit (expense) applied to decrease (increase) Retained earnings/Other comprehensive income | 2.7 |  |  | (0.1 | ) |  | 0.6 |  |  | 3.2 |
Income tax provision | $ | (11.2 | ) |  | $ | (1.5 | ) |  | $ | (5.7 | ) |  | $ | (18.4 | )
Year Ended December 31, 2018 |  |  |  |  |  |  |
Current | $ | 11.9 |  |  | $ | (1.9 | ) |  | $ | (1.5 | ) |  | $ | 8.5 |
Deferred | (34.7 | ) |  | 0.1 |  |  | (1.4 | ) |  | (36.0 | )
Expense applied to increase Retained earnings/ Other comprehensive loss | (0.7 | ) |  | — |  |  | (0.1 | ) |  | (0.8 | )
Income tax provision | $ | (23.5 | ) |  | $ | (1.8 | ) |  | $ | (3.0 | ) |  | $ | (28.3 | )
Year Ended December 31, 2017 |  |  |  |  |  |  |
Current | $ | 3.1 |  |  | $ | (0.8 | ) |  | $ | (1.0 | ) |  | $ | 1.3 |
Deferred | (82.0 | ) |  | (1.0 | ) |  | (5.7 | ) |  | (88.7 | )
Expense applied to increase Retained earnings/Other comprehensive income | (0.1 | ) |  | (0.1 | ) |  | — |  |  | (0.2 | )
Income tax provision | $ | (79.0 | ) |  | $ | (1.9 | ) |  | $ | (6.7 | ) |  | $ | (87.6 | )
The following table presents a reconciliation between the provision for income taxes and the amount computed by applying the federal statutory income tax rate to Income before income taxes for the periods presented (in millions of dollars):
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Amount of federal income tax provision based on the statutory rate | $ | (16.9 | ) |  | $ | (25.2 | ) |  | $ | (46.5 | )
(Increase) decrease in federal valuation allowances | (0.1 | ) |  | 1.7 |  |  | 0.5 |
Non-deductible compensation expense | (1.7 | ) |  | (0.6 | ) |  | (2.3 | )
Non-deductible benefit (expense) | 0.1 |  |  | (1.5 | ) |  | — |
State income tax provision, net of federal benefit 1 | (4.5 | ) |  | (2.5 | ) |  | (4.3 | )
Research and development credit | 7.7 |  |  | — |  |  | — |
Gross increases for tax positions from current year | (0.3 | ) |  | — |  |  | — |
Gross increases for tax positions from prior years | (2.4 | ) |  | — |  |  | — |
Foreign income tax expense | (0.1 | ) |  | (0.5 | ) |  | (0.1 | )
Foreign undistributed (earnings) loss | (0.2 | ) |  | 0.4 |  |  | (5.9 | )
Tax rate change | — |  |  | (0.1 | ) |  | (29.0 | )
Income tax provision | $ | (18.4 | ) |  | $ | (28.3 | ) |  | $ | (87.6 | )
___________________________
1. | State income taxes were $3.8 million in 2019, decreased by a $0.7 million due to lower tax rate true-ups in various states and increased by a $1.4 million change in the valuation allowance relating to certain state net operating losses. The state income taxes were $4.5 million in 2018, increased by a $0.9 million due to higher tax rate true-ups in various states, offset by a $2.9 million decrease in the valuation allowance relating to certain state net operating losses. The state income taxes were $4.0 million in 2017, increased by a $2.5 million change in tax rates, offset by a $2.2 million decrease in the valuation allowance relating to certain state net operating losses.
Deferred Income 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 amounts used for income tax purposes. The following table presents the components of our net deferred income tax assets as of the periods presented (in millions of dollars):
| December 31,
| 2019 |  | 2018
Deferred income tax assets: |  |  |
Loss and credit carryforwards | $ | 48.7 |  |  | $ | 48.7 |
Salaried VEBA (see Note 5) | 8.7 |  |  | 8.0 |
Other assets | 30.1 |  |  | 27.2 |
Leased asset | 7.1 |  |  | — |
Inventories | 9.4 |  |  | 20.0 |
Valuation allowances | (9.9 | ) |  | (8.4 | )
Total deferred income tax assets | 94.1 |  |  | 95.5 |
Deferred income tax liabilities: |  |  |
Property, plant and equipment | (78.5 | ) |  | (62.0 | )
Leased liability | (6.3 | ) |  | — |
Undistributed foreign earnings | (2.0 | ) |  | (1.8 | )
Total deferred income tax liabilities | (86.8 | ) |  | (63.8 | )
Net deferred income tax assets 1 | $ | 7.3 |  |  | $ | 31.7 |
__________________________
1. | Of the total net deferred income tax assets of $7.3 million, $11.8 million was presented as Deferred tax assets, net, and $4.5 million was presented as Deferred tax liabilities on the Consolidated Balance Sheet as of December 31, 2019. Of the total net deferred income tax assets of $31.7 million, $35.9 million was presented as Deferred tax assets, net, and $4.2 million was presented as Deferred tax liabilities on the Consolidated Balance Sheet as of December 31, 2018.
Tax Attributes. At December 31, 2019, we had $121.3 million of net operating loss ("NOL") carryforwards available to reduce future cash payments for federal income taxes in the United States. H.R.1, commonly referred to as the Tax Cut and Jobs Act ("Tax Act"), allows net operating losses generated prior to December 31, 2017 (including our NOL carryforwards) to be fully deducted against 100% of taxable income until fully utilized or expired. Our NOL carryforwards expire periodically through 2030. We also had $5.7 million of alternative minimum tax ("AMT") credit carryforwards available to offset regular federal income tax requirements. Since the corporate AMT has been repealed in the Tax Act for tax years beginning after December 31, 2017, our AMT credit carryforwards that have not yet been used are refundable in future years. We will use AMT credits to offset any regular income tax liability in years 2019 and 2020, with 50% of remaining AMT credits refunded in each of the 2019 and 2020 tax years and all remaining credits refunded in tax year 2021. In addition, we had $7.7 million of federal research and development ("R&D") credit carryforwards to offset regular federal income tax requirements. Our R&D credit carryforwards expire periodically through 2039. In assessing the realizability of deferred tax assets, management considers whether it is "more likely than not" that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. Due to uncertainties surrounding the realization of some of our deferred tax assets, primarily including state NOL carryforwards sustained during the prior years and expiring tax benefits, we have a valuation allowance against our deferred tax assets. When recognized, the tax benefits relating to any reversal of this valuation allowance will be recorded as a reduction of income tax expense. There was an increase in the valuation allowance of $1.5 million in 2019. There was a decrease in the valuation allowance of $4.6 million and $2.7 million in 2018 and 2017, respectively. The increase in the valuation allowance for 2019 was primarily due to unutilized state NOL carryforwards and Federal Separate Return Limitation Year losses that were expected to expire. The decrease in the valuation allowance for 2018 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuation allowances and the expiration of a capital loss carryforward. The decrease in the valuation allowance for 2017 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuation allowances and the utilization of capital losses. Other. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. Our tax returns for certain past years are still subject to examination by taxing authorities and the use of NOL carryforwards in future periods could trigger a review of attributes and other tax matters in years that are not otherwise subject to examination. In 2018, we made an accounting policy election to treat global intangible low-taxed income ("GILTI") as a period cost. We have gross unrecognized benefits relating to uncertain tax positions. The following table presents a reconciliation of changes in the gross unrecognized tax benefits for the periods presented (in millions of dollars):
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Gross unrecognized tax benefits at beginning of period |  | $ | 1.5 |  |  | $ | 1.5 |  |  | $ | 1.8 |
Gross increases for tax positions of current year |  | 0.3 |  |  | — |  |  | — |
Gross increases for tax positions of prior years |  | 2.3 |  |  | — |  |  | — |
Gross decreases for tax positions of prior years |  | — |  |  | — |  |  | (0.3 | )
Gross unrecognized tax benefits at end of period |  | $ | 4.1 |  |  | $ | 1.5 |  |  | $ | 1.5 |
If and when the $4.1 million of gross unrecognized tax benefits at December 31, 2019 are recognized, $0.9 million will be reflected in our income tax provision and thus affect the effective tax rate in future periods. In addition, we recognize interest and penalties related to unrecognized tax benefits in the income tax provision. We had $0.3 million and $0.2 million accrued for interest and penalties at December 31, 2019 and December 31, 2018, respectively. Of these amounts, none were considered current and, as such, were included in Long-term liabilities on the Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018. We recognized an increase in interest and penalty of $0.1 million in our tax provision in 2019. We recognized an increase in interest and penalty of $0.1 million in our tax provision in 2018. We recognized a decrease in interest and penalty of $0.1 million in our tax provision in 2017. We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.

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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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