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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Taxes [Abstract]  
Income Taxes
19. Income Taxes

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

 
  
Year Ended December 31,
  
 
  
2022
    
2021
    
2020
  
Current:
                  
Domestic
  
$
16,182
    
$
26,528
    
$
30,368
  
Foreign
    
8,669
      
5,851
      
4,064
  
Total current
    
24,851
      
32,379
      
34,432
  
 
                        
Deferred:
                        
Domestic
    
1,102
      
(1,161
)
    
(7,418
)
Foreign
    
(747
)
    
(174
)
    
(52
)
Total deferred
    
355
      
(1,335
)
    
(7,470
)
Total income tax provision
  
$
25,206
    
$
31,044
    
$
26,962
  

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,
  
 
  
2022
    
2021
    
2020
  
U.S. Federal income tax rate of 21%
  
$
20,650
    
$
27,398
    
$
22,550
  
Increase (decrease) in tax rate resulting from:
                        
State and local income taxes, net of federal income tax benefit
    
3,118
      
4,579
      
3,781
  
Income tax (benefit) attributable to foreign income
    
(53
)
    
(122
)
    
330
  
Other non-deductible items, net
    
423
   
(1,277
)
    
(563
)
Change in valuation allowance
    
1,068
      
466
      
864
  
Provision for income taxes
  
$
25,206
    
$
31,044
    
$
26,962
  

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,
  
 
  
2022
    
2021
  
Deferred tax assets:
            
Inventories
  
$
11,604
    
$
12,181
  
Allowance for customer returns
    
14,506
      
14,185
  
Postretirement benefits
    
25
      
33
  
Allowance for expected credit losses
    
2,965
      
1,450
  
Accrued salaries and benefits
    
12,048
      
15,585
  
Tax credit and NOL carryforwards
    
5,103
      
5,702
  
Accrued asbestos liabilities
    
17,208
      
15,463
  
Other
    
190
      
190
  
 
    
63,649
      
64,789
  
Valuation allowance
    
(3,155
)
    
(2,087
)
Total deferred tax assets
    
60,494
      
62,702
  
Deferred tax liabilities:
                
Intangible assets acquired, net of amortization
    13,292       13,450  
Depreciation
    
8,715
      
7,589
  
    Interest rate swap agreement
     1,299       —  
Other
    
3,530
      
5,537
  
Total deferred tax liabilities
    
26,836
      
26,576
  
 
                
Net deferred tax assets
  
$
33,658
    
$
36,126
  

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 $3.2 million as of December 31, 2022 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 $33.7 million as of December 31, 2022, which is net of the remaining valuation allowance. At December 31, 2022, we have foreign tax credit carryforwards of approximately $3 million that will expire in varying amounts by 2031.

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, 2022, 2021 and 2020, 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, 2022, the Company is no longer subject to U.S. Federal tax examinations for years before 2019.  We remain subject to examination by state and local tax authorities for tax years 2018 through 2021.  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 (2018 onward), Hong Kong (2017 onward), China (2020 onward), Mexico (2018 onward),  Poland (2017 onward), Hungary (2016 onward) and Germany (2019 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.