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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Taxes [Abstract]  
Income Taxes
17. Income Taxes

The income tax provision (benefit) consists of the following (in thousands):

 
  
Year Ended December 31,
  
 
  
2021
    
2020
    
2019
  
Current:
                  
Domestic
  
$
26,528
    
$
30,368
    
$
14,632
  
Foreign
    
5,851
      
4,064
      
3,019
  
Total current
    
32,379
      
34,432
      
17,651
  
 
                        
Deferred:
                        
Domestic
    
(1,161
)
    
(7,418
)
    
4,677
  
Foreign
    
(174
)
    
(52
)
    
417
  
Total deferred
    
(1,335
)
    
(7,470
)
    
5,094
  
Total income tax provision
  
$
31,044
    
$
26,962
    
$
22,745
  

Reconciliations between taxes at the U.S. Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands):

 
  
Year Ended December 31,
  
 
  
2021
    
2020
    
2019
  
 
                  
U.S. Federal income tax rate of 21%
  
$
27,398
    
$
22,550
    
$
19,277
  
Increase (decrease) in tax rate resulting from:
                        
State and local income taxes, net of federal income tax benefit
    
4,579
      
3,781
      
3,328
  
Income tax (tax benefit) attributable to foreign income
    
(122
)
    
330
      
191
  
Other non-deductible items, net
    
(1,277
)
    
(563
)
    
(409
)
Change in valuation allowance
    
466
      
864
      
358
  
Provision for income taxes
  
$
31,044
    
$
26,962
    
$
22,745
  

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets (in thousands):

 
  
December 31,
  
 
  
2021
    
2020
  
Deferred tax assets:
            
Inventories
  
$
12,181
    
$
12,773
  
Allowance for customer returns
    
14,185
      
13,804
  
Postretirement benefits
    
33
      
42
  
Allowance for expected credit losses
    
1,450
      
1,412
  
Accrued salaries and benefits
    
15,585
      
12,984
  
Tax credit and NOL carryforwards
    
5,702
      
1,451
  
Accrued asbestos liabilities
    
15,463
      
15,372
  
Other
    
190
      
170
  
 
    
64,789
      
58,008
  
Valuation allowance
    
(2,087
)
    
(1,621
)
Total deferred tax assets
    
62,702
      
56,387
  
Deferred tax liabilities:
                
Intangible assets acquired, net of amortization
    13,450       —  
Depreciation
    
7,589
      
7,710
  
Other
    
5,537
      
3,907
  
Total deferred tax liabilities
    
26,576
      
11,617
  
 
                
Net deferred tax assets
  
$
36,126
    
$
44,770
  

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be realized.  Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be utilized.  We consider the level of historical taxable income, scheduled reversal of temporary differences, carryback and carryforward periods, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted.  We also consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings. Assumptions regarding future taxable income require significant judgment. Our assumptions are consistent with estimates and plans used to manage our business.

The valuation allowance of $2.1 million as of December 31, 2021 is intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  Based on these considerations, we believe it is more likely than not that we would realize the benefit of the net deferred tax asset of $36.1 million as of December 31, 2021, which is net of the remaining valuation allowance. At December 31, 2021, we have foreign tax credit carryforwards of approximately $1.9 million that will expire in varying amounts by 2030.

As related to the taxation of our foreign subsidiaries, we aggregate our foreign earnings and profits, and utilize allowable deductions and available foreign tax credits in computing our U.S. tax.  Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most or all of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

In accordance with generally accepted accounting practices, we recognize in our financial statements only those tax positions that meet the more-likely-than-not recognition threshold.  We establish tax reserves for uncertain tax positions that do not meet this threshold.  During the years ended December 31, 2021, 2020 and 2019, we did not establish a liability for uncertain tax positions.

We are subject to taxation in the U.S. and various state, local and foreign jurisdictions.  As of December 31, 2021, the Company is no longer subject to U.S. Federal tax examinations for years before 2018.  We remain subject to examination by state and local tax authorities for tax years 2017 through 2020.  Foreign jurisdictions have statutes of limitations generally ranging from 2 to 6 years.  Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2017 onward), Hong Kong (2016 onward), China (2017 onward) Mexico (2017 onward),  Poland (2016 onward), and Hungary (2015 onward).  We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease over the next 12 months; however, actual developments in this area could differ from those currently expected.