
	Year Ended December 31,
(dollars in millions)	2019		2018		2017
Current:
U.S.:
Federal	$	(4.1)	$	14.9	$	(1.2)
State and local	—		0.4		1.0
Foreign	68.5		63.2		65.7
Total current	64.4		78.5		65.5
Deferred:
U.S.:
Federal	33.2		(35.1)		(78.4)
State and local	(0.8)		(4.3)		(2.1)
Foreign	(35.5)		(15.3)		(53.6)
Total deferred	(3.1)		(54.7)		(134.1)
Income tax expense (benefit)	$	61.3	$	23.8	$	(68.6)


	Year Ended December 31,
(dollars in millions)	2019			2018			2017
U.S. federal statutory tax rate	21.0		%	21.0		%	35.0		%

Taxes computed at U.S. statutory rate	$	29.6		$	(11.2)		$	(91.1)
State income taxes, net of federal benefit	(0.6)			(3.1)			1.7
U.S. tax on foreign operations	23.7			31.2			35.0
Foreign tax on foreign operations	12.1			11.4			8.3
Change in valuation allowances	0.9			27.5			43.3
Tax on undistributed foreign earnings	(3.2)			7.0			1.5
Net change in reserve	(2.1)			(4.9)			(10.6)
Tax rate changes	(0.9)			8.3			(19.4)
Impact of the TCJA	—			(41.8)			(46.3)
Other, net	1.8			(0.6)			9.0
Income tax expense (benefit)	$	61.3		$	23.8		$	(68.6)

Effective tax rate	43.5		%	(44.7)		%	26.3		%

On December 22, 2017, the TCJA was enacted into law in the U.S. The legislation contains several key tax provisions including the reduction of the corporate income tax rate to 21% effective January 1, 2018, a one-time transition tax on foreign earnings which have not previously been subject to tax in the U.S., a limitation on the tax deductibility of interest expense, and new taxes on certain foreign-sourced earnings.

At December 31, 2017, the Company recorded a provisional income tax benefit for continuing operations totaling $46.3 million as a result of remeasuring U.S. federal deferred taxes for the change in statutory tax rate and a partial release of the U.S. federal valuation allowance due to changes in the carryforward period and limitation on the utilization of future net operating losses. The Company completed its analysis of the impact of the TCJA enactment-date effects and recorded an additional benefit of $41.8 million for continuing operations in 2018, primarily driven by a release of valuation due to the expected impact of global intangible low-taxed income (“GILTI”) law changes of $55.5 million, partially offset by $13.7 million for the finalization of the calculation of the transition tax.


	December 31,
(dollars in millions)	2019		2018
Deferred tax assets:
Net operating losses	$	112.7	$	224.5
Interest carryforward	69.3		17.3
Capital loss carryforward	66.6		—
Tax credits	33.8		38.5
Employee benefits	22.2		38.6
Research and development costs	18.4		11.8
Unrealized foreign exchange	9.9		17.3
Accrued liabilities	5.3		26.4
Accounts receivable	1.3		16.0
Financing activities	0.1		11.8
Arysta outside basis difference	—		274.2
Goodwill	—		10.3
Other	18.4		14.9
Total deferred tax assets	358.0		701.6
Valuation allowance	(219.6)		(475.2)
Total gross deferred tax assets	138.4		226.4
Deferred tax liabilities:
Intangible assets	198.0		631.2
Property, plant and equipment	17.9		31.8
Undistributed foreign earnings	9.9		29.5
Goodwill	6.3		—
Other	—		0.4
Total gross deferred tax liabilities	232.1		692.9
Net deferred tax liability	$	93.7	$	466.5

Deferred tax assets are included in the Consolidated Balance Sheets as "Other assets," "Non-current assets of discontinued operations" and "Deferred income taxes" at December 31, 2019 and 2018. The total deferred tax assets, valuation allowance and deferred tax liabilities of discontinued operations were $173 million, $75 million and $450 million, respectively, at December 31, 2018. There were no deferred taxes associated with discontinued operations at December 31, 2019.

The Company has provided for income and withholding taxes on previously unremitted earnings of certain foreign subsidiaries from 2015 and other foreign subsidiaries from 2016. As of December 31 2019, the Company is no longer permanently invested in income previously taxed in the U.S., and this change had an immaterial impact on 2019 tax expense. At December 31, 2019, the Company had accrued a deferred tax liability of $12.6 million of income and withholding taxes that would be due upon the

distribution of such earnings from non-U.S. subsidiaries to the U.S. No additional income taxes have been provided on approximately $130 million of remaining undistributed foreign earnings as these amounts continue to be indefinitely reinvested in our foreign operations. Determining the amount of the unrecognized deferred tax liability related to any remaining undistributed foreign earnings is not practicable.

Valuation allowances reflect the Company's assessment that it is more likely than not that certain federal, state and foreign deferred tax assets, primarily net operating losses, will not be realized. The assessment of the need for a valuation allowance requires management to make estimates and assumptions about future earnings, reversal of existing temporary differences and available tax planning strategies. If actual experience differs from these estimates and assumptions, the recorded deferred tax asset may not be fully realized, resulting in an increase to income tax expense in the Company's results of operations. The valuation allowance for deferred tax assets was $220 million and $475 million at December 31, 2019 and 2018, respectively. During 2019, the valuation allowance decreased by $256 million primarily due to the completion of the Arysta Sale, offset by an increase in valuation allowances related to interest carryforwards.

At December 31, 2019, the Company had federal, state and foreign net operating loss carryforwards of approximately $161 million, $745 million and $201 million, respectively. The U.S. federal net operating loss carryforwards expire between 2023 and 2037. The majority of the state net operating loss carryforwards expire between 2020 and 2036. The foreign tax net operating loss carryforwards expire between 2020 through 2036 or may be carried forward indefinitely. In addition, at December 31, 2019, the Company had approximately $272 million, $30.2 million and $3.8 million of capital loss carryforwards, foreign tax credits, and other tax credits, respectively, available for carryforward. The capital loss carryforwards expire in 2024. These carryforward periods range from ten years to an unlimited period of time. If certain changes in the Company's ownership occur, there could be an annual limitation on the amount of utilizable carryforwards.


	Year Ended December 31,
(dollars in millions)	2019		2018		2017
Unrecognized tax benefits at beginning of period	$	81.4	$	90.3	$	128.3
Additions based upon prior year tax positions	1.4		2.7		4.0
Additions based on current year tax positions	3.2		3.1		6.5
Reductions for prior period positions	(7.6)		(6.9)		(38.0)
Reductions for settlements and payments	(2.1)		(4.3)		(4.2)
Reductions due to closed statutes	(5.1)		(3.5)		(6.3)
Total unrecognized tax benefits at end of period	$	71.2	$	81.4	$	90.3

At December 31, 2019, the Company had $71.2 million of total unrecognized tax benefits, all of which, if recognized, would impact the Company’s effective tax rate. Due to expected settlements and statute of limitations expirations, the Company estimates that $4.4 million of the total unrecognized benefits will reverse within the next twelve months.

The Company recognizes interest and/or penalties related to income tax matters as part of income tax expense (benefit), which totaled $(2.9) million, $0.4 million and $1.2 million, for 2019, 2018 and 2017, respectively. The Company's accrual for interest and penalties totaled $9.6 million and $12.9 million at December 31, 2019 and 2018, respectively.

Major Jurisdictions

Open Years

China

2015

through current

Germany

2013

through current

Taiwan

2013

through current

United Kingdom

2008 and 2015

through current

United States

2015

through current