The provision for income taxes consists of the following:


	Year ended May 31
(in thousands)	2020			2019			2018
Current
Domestic
Federal	$	6,886		$	7,173		$	9,715
Uncertain tax provision		269			13			(963	)
State		1,262			1,265			1,377
Foreign		2,475			3,758			3,066
Deferred
Domestic
Federal		1,964			1,031			(1,981	)
State		195			98			(355	)
Foreign		(221	)		(555	)		(609	)

Provision for Income Taxes	$	12,830		$	12,783		$	10,250

The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense is as follows:


	Year ended May 31
(in thousands)	2020			2019			2018
Tax at U.S. statutory rate	$	15,184		$	15,321		$	21,459
Permanent differences		360			(56	)
Section 199 domestic production deduction		—			—			(1,167	)
Global intangible low-taxed income (GILTI)		438			840			—
Foreign derived intangible income deduction (FDII)		(1,120	)		(1,531	)		—
Foreign rate differential		(182	)		495			(461	)
Subpart F income		634			842			816
Tax benefits on stock-based compensation		(1,998	)		(2,586	)		(4,816	)
Changes in tax contingencies - Increase/(Release)		269			13			(1,035	)
Provision for state income taxes, net of federal benefit		1,412			1,251			975
Remeasurement of deferred taxes		—			—			(6,022	)
Transition tax on foreign earnings and profits		—			—			1,223
Tax c redits		(1,417	)		(1,726	)		(1,151	)
Other		(750	)		(80	)		429

Tax Expense	$	12,830		$	12,783		$	10,250

On June 1, 2017, the Company adopted ASU No.

2016-09—Compensation-Stock

Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to employees. The guidance requires the recognition of the income effects of awards in the income statement when the awards vest or are settled, thus eliminating additional

paid-in

capital pools. The guidance also allows for a policy election to account for forfeitures as they occur, rather than on an estimated basis, and requires that excess tax benefits be classified as an operating activity on the Statement of Cash Flows. The adoption of this ASU decreased income tax expense by $2.0 million in fiscal 2020, by $2.6 million in fiscal 2019 and by $4.8 million in fiscal 2018.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the U.S. Tax Act) was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a

one-time

transition tax on the mandatory deemed repatriation of foreign earnings. The U.S. Tax Act also includes a provision to tax global intangible

low-taxed

income (GILTI) of foreign subsidiaries and a deduction for foreign derived intangible income (FDII), both of which became effective for the Company beginning June 1, 2018.

In fiscal 2018, the Company recorded a net benefit of $4.8 million related to the U.S. Tax Act, due to the impact of the reduction in the tax rate on deferred tax assets and liabilities of $6.0 million, partially offset by $1.2 million of

one-time

transition tax on the deemed repatriation of foreign earnings. In fiscal 2019, the Company finalized its calculation of these amounts and recorded immaterial adjustments to income tax expense; the Company also recorded expense of $840,000 related to GILTI and a tax benefit of $1.5 million related to FDII.

Foreign tax credits, primarily offsetting taxes associated with Subpart F and GILTI income, were $945,000, $1,296,000 and $791,000 in fiscal years 2020, 2019 and 2018, respectively. The Company’s U.S.

research and development credits

were $472,000, $430,000 and $422,000 in fiscal years 2020, 2019 and 2018, respectively.

Deferred income taxes reflect the 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. Significant components of our deferred income tax liabilities and assets are as follows:


	Year ended May 31
(in thousands)	2020			2019
Deferred income tax liabilities
Indefinite and long-lived assets	$	(20,867	)	$	(18,963	)
Prepaid expenses		(795	)		(586	)

		(21,662	)		(19,549	)
Deferred income tax assets
Stock o ptions		1,479			1,497
Inventories and accounts receivable		1,336			1,315
Tax loss carryforwards		484			417
Accrued expenses and other		657			1,109
Less: Valuation a llowance		(419	)		(407	)

		3,537			3,931

Net deferred income tax liabilities	$	(18,125	)	$	(15,618	)

The Company has the following net operating loss carryforwards:


	As of
Jurisdiction	May 31, 2020		Expiry
U.S.	$	408		2037 to indefinite
Foreign		1,354		2024 to 2039

	$	1,762

We are subject to income taxes in the U.S. (federal and state) and in num

rous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for

tax-related

uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.

The reconciliation of our tax

uncertainties

is as follows:


	Year ended May 31
(in thousands)	2020		2019			2018
Beginning balance	$	611	$	598		$	1,633
Increase/(decrease) related to prior periods		56		(106	)		(1,157	)
Increase to current period		213		119			122

Ending balance	$	880	$	611		$	598

The Company is no longer subject to examination by the Internal Revenue Service for fiscal year 2016 and preceding years.