On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into federal law. The TCJA significantly revised the U.S. corporate income tax system by lowering the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. In addition, the TCJA added several new provisions including changes to bonus depreciation, the deduction for executive compensation, a tax on global intangible low-taxed income (“GILTI”), the base erosion anti-abuse tax (“BEAT”) and a deduction for foreign-derived intangible income (“FDII”). Many of these provisions, including the tax on GILTI, the BEAT and the deduction for FDII, did not apply to the Company until June 1, 2018. The Company has elected to account for the tax on GILTI as a period cost and thus has not adjusted any of the deferred tax assets and liabilities of its foreign subsidiaries for the new tax. The two material items that impacted the Company for fiscal 2018 were the reduction in the tax rate and a one-time mandatory deemed repatriation tax imposed on the Company’s unremitted foreign earnings. Due to the Company’s fiscal year, the Company’s fiscal 2018 U.S. federal blended statutory income tax rate was 29.2%. The Company’s U.S. federal statutory income tax rate is 21.0% starting June 1, 2018.

Consistent with applicable Securities and Exchange Commission guidance in Staff Accounting Bulletin 118 (“SAB118”), the Company recognized a provisional income tax benefit of $38,200,000 related to the re-measurement of deferred tax assets and liabilities and a provisional income tax expense of $6,900,000 for the one-time mandatory deemed repatriation tax during fiscal 2018. During fiscal 2019, the Company finalized the accounting for the TCJA and made no material adjustments to these provisional amounts.

Earnings before income taxes for the three fiscal years ended May 31 include the following components:

(in thousands)	2020		2019		2018
U.S. based operations	$	99,493	$	173,200	$	177,088
Non – U.S. based operations		11,293		33,256		31,982
Earnings before income taxes		110,786		206,456		209,070
Less: Net earnings attributable to noncontrolling interests*		5,648		9,818		6,056
Earnings before income taxes attributable to controlling interest	$	105,138	$	196,638	$	203,014

Significant components of income tax expense (benefit) for the fiscal years ended May 31 were as follows:

(in thousands)	2020			2019			2018
Current
Federal	$	20,739		$	15,454		$	33,261
State and local		1,713			2,309			3,292
Foreign		5,199			7,985			9,904
		27,651			25,748			46,457
Deferred
Federal		(2,350	)		18,195			(34,442	)
State and local		732			1,621			388
Foreign		309			(2,381	)		(4,183	)
		(1,309	)		17,435			(38,237	)
	$	26,342		$	43,183		$	8,220

Tax benefits (expenses) related to defined benefit pension liability that were credited to (deducted from) OCI were $1,365,000, $418,000, and $(309,000) for fiscal 2020, fiscal 2019 and fiscal 2018, respectively. Tax benefits (expenses) related to cash flow hedges that were credited to (deducted from) OCI were $(559,000), $3,780,000, and $(392,000) for fiscal 2020, fiscal 2019 and fiscal 2018, respectively.

A reconciliation of the federal statutory corporate income tax rate to total tax provision follows:

	2020			2019			2018
Federal statutory corporate income tax rate		21.0	%		21.0	%		29.2	%
State and local income taxes, net of federal tax benefit		2.4			2.1			2.3
Non-U.S. income taxes at other than federal statutory rate		3.1			0.2			(1.4	)
Qualified production activities deduction		-			-			(2.3	)
Impact of tax reform (1)		-			-			(15.4	)
Worthington Aritas write down		-			-			(4.8	)
Excess benefit related to share-based payment awards		(1.2	)		(1.4	)		(2.0	)
Nondeductible executive compensation		1.1			0.6			0.3
AMTROL acquisition		-			-			(1.9	)
Other		(1.3	)		(0.5	)		-
Effective tax rate attributable to controlling interest		25.1	%		22.0	%		4.0	%

The above effective tax rate attributable to controlling interest excludes any impact from the inclusion of net earnings attributable to noncontrolling interests in our consolidated statements of earnings. The effective tax rates upon inclusion of net earnings attributable to noncontrolling interests were 23.8%, 20.9% and 3.9% for fiscal 2020, fiscal 2019 and fiscal 2018, respectively. Net earnings attributable to noncontrolling interests are primarily a result of our WSP, Spartan, and TWB consolidated joint ventures. The earnings attributable to the noncontrolling interests in WSP, Spartan and TWB’s U.S. operations do not generate tax expense to Worthington since the investors in WSP, Spartan and TWB’s U.S. operations are taxed directly based on the earnings attributable to them. The tax expense of TWB’s wholly-owned foreign corporations is reported in our consolidated tax expense.

Under applicable accounting guidance, a tax benefit may be recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Any tax benefits recognized in our financial statements from such a position were measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

The total amount of unrecognized tax benefits was $1,718,000, $1,621,000, and $2,638,000 as of May 31, 2020, 2019 and 2018, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate attributable to controlling interest was $1,357,000 as of May 31, 2020. Unrecognized tax benefits are the differences between a tax position taken, or expected to be taken in a tax return, and the benefit recognized for accounting purposes. Accrued amounts of interest and penalties related to unrecognized tax benefits are recognized as part of income tax expense within our consolidated statements of earnings. As of May 31, 2020, 2019 and 2018, we had accrued liabilities of $68,000, $287,000 and $271,000, respectively, for interest and penalties related to unrecognized tax benefits.

(In thousands)
Balance at May 31, 2019	$	1,621
Decreases - tax positions taken in prior years		(83	)
Increases - tax positions taken in prior years		1,419
Increases - current tax positions		35
Settlements		(1,118	)
Lapse of statutes of limitations		(156	)
Balance at May 31, 2020	$	1,718

Approximately $167,000 of the liability for unrecognized tax benefits is expected to be settled in the next twelve months due to the expiration of statutes of limitations in various tax jurisdictions and as a result of expected settlements with various tax jurisdictions. While it is expected that the amount of unrecognized tax benefits will change in the next twelve months, any change is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

The following is a summary of the tax years open to examination by major tax jurisdiction:

The components of our deferred tax assets and liabilities as of May 31 were as follows:

(in thousands)	2020			2019
Deferred tax assets
Accounts receivable	$	1,246		$	1,516
Inventories		5,554			5,649
Accrued expenses		21,214			21,195
Net operating loss carry forwards		11,732			16,433
Stock-based compensation		6,931			10,989
Derivative contracts		1,920			2,054
Operating lease - ROU liability		7,294			-
Other		3,549			316
Total deferred tax assets		59,440			58,152
Valuation allowance for deferred tax assets		(11,178	)		(14,619	)
Net deferred tax assets		48,262			43,533
Deferred tax liabilities
Property, plant and equipment		(95,553	)		(91,732	)
Investment in affiliated companies, principally due to undistributed earnings		(15,884	)		(23,035	)
Operating lease - ROU asset		(6,241	)		-
Other		(2,526	)		(2,868	)
Total deferred tax liability		(120,204	)		(117,635	)
Net deferred tax liability	$	(71,942	)	$	(74,102	)

At May 31, 2020, we had tax benefits for federal foreign tax credits of $550,000 that expire May 31, 2030, tax benefits for state net operating loss carry forwards of $10,494,000 that expire from fiscal 2021 to the fiscal year ending May 31, 2040, and tax benefits for state net operating loss carry forwards of $889,000 with no expiration date.

The valuation allowance for deferred tax assets of $11,178,000 at May 31, 2020 is associated primarily with the net operating loss carry forwards. The majority of the state valuation allowance relates to our facility in Decatur, Alabama and our oil and gas equipment business.

Based on our history of profitability, the scheduled reversal of deferred tax liabilities, and taxable income projections, we have determined that it is more likely than not that the remaining deferred tax assets are otherwise realizable.