As outlined in Note 12 — Long-Term Obligations, on July 30, 2020, the Company and certain of its direct or indirect subsidiaries, completed certain refinancing transactions and as a result a substantial amount of the Company’s debt was extinguished. Absent an exception, a debtor recognizes cancellation of indebtedness income (CODI) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. Since the Company was considered insolvent for tax purposes immediately before the exchange, CODI can be excluded from taxable income to the extent that the Company’s liabilities exceeded the fair market value of its gross assets at the date of the exchange. However, the Company must reduce certain of its tax attributes by the amount of any CODI excluded from taxable income, as limited by Section 1017(b)(2) of the Internal Revenue Code of 1986, as amended. The actual reduction in tax attributes occurs after the determination of tax for the year of the debt discharge and takes effect on the first day of the Company's tax year subsequent to the date of the refinancing transactions, or January 1, 2021. As a result of the refinancing transactions, the Company realized CODI of $552,671, of which $500,989 was excluded from taxable income because of the insolvency exception. After application of the Section 1017(b)(2) limitation, the Company reduced its tax attributes and related deferred taxes by $217,532 ($47,663, tax effected), with the balance of $283,457 ($59,526, tax effected), treated as a permanent difference. The Company also has reduced its net operating loss carryforward by $525, and its foreign tax credit carryforward by $4,101.

	Fiscal Year Ended December 31,
	2020			2019			2018
Domestic	$	(542,046	)	$	(572,287	)	$	132,482
Foreign		(143,064	)		38,124			29,115
Total	$	(685,110	)	$	(534,163	)	$	161,597

	Fiscal Year Ended December 31,
	2020			2019			2018
Current:
Federal	$	(61,528	)	$	28,908		$	20,609
State		(1,639	)		4,613			5,726
Foreign		1,599			12,540			7,870
Total current expense		(61,568	)		46,061			34,205
Deferred:
Federal		(70,440	)		(37,166	)		6,194
State		(19,252	)		(11,207	)		(880	)
Foreign		(5,393	)		1,007			(741	)
Total deferred (benefit) expense		(95,085	)		(47,366	)		4,573
Income tax (benefit) expense	$	(156,653	)	$	(1,305	)	$	38,778

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

	December 31,
	2020			2019
Deferred income tax assets:
Inventory reserves and capitalization	$	9,199		$	8,659
Allowance for doubtful accounts		2,020			1,194
Accrued liabilities		16,798			8,391
Equity based compensation		4,437			3,998
Federal tax loss carryforwards		—			525
State tax loss carryforwards		9,610			2,703
Foreign tax loss carryforwards		2,839			15,874
Foreign tax credit carryforwards		—			5,397
Debt Exchange basis difference		58,270			—
Section 163(j) Interest Limitation		—			9,134
Lease Liabilities		199,585			224,966
Outside basis differences in foreign subsidiaries (APB 23)		12,800			—
Capitalized refinancing and other costs		4,216			3,816
Other		3,922			2,231
Deferred income tax assets before valuation allowances		323,696			286,888
Less: valuation allowances		(13,731	)		(24,623	)
Deferred income tax assets, net	$	309,965		$	262,265
Deferred income tax liabilities:
Depreciation	$	45,984		$	21,211
Trade Name		98,817			135,751
Amortization of goodwill and other assets		11,654			19,927
Loss Recapture and other differences		10,962			—
Foreign earnings expected to be repatriated		1,072			1,177
Lease Right of Use Assets		166,617			208,772
Other		9,281			1,488
Deferred income tax liabilities	$	344,387		$	388,326

The Company nets all of its deferred income tax assets and liabilities on a jurisdictional basis and classifies them as noncurrent on the balance sheet. In the Company’s December 31, 2020 consolidated balance sheet, $283 was included in “other assets, net” and $34,705 was included in deferred income tax liabilities. In addition, $2,628 of net deferred income tax assets are included in “Assets held for sale”. In the Company’s December 31, 2019 consolidated balance sheet, $20 was included in “other assets, net” and $126,081 was included in deferred income tax liabilities.

Management assesses the available positive and negative evidence to estimate if sufficient taxable income will be generated to realize existing deferred tax assets. On the basis of this evaluation, a valuation allowance was recorded to reduce the total deferred tax assets to an amount that will, more-likely-than-not, be realized in the future. The change in the valuation allowance primarily relates to increases for carryforwards of foreign and state net operating losses, offset by the reclass of amounts related to entities included in “Assets held for sale,” and foreign tax credits which expired or were reduced by the tax attributes reduction mentioned above.

As of December 31, 2020, the Company had foreign tax-effected net operating loss carryforwards in Canada of $284, which have a 20 year carryforward, and Mexico of $2,555, which begin to expire in 2024. In addition, the U.S. state net operating loss carryforwards begin to expire in 2022, with the majority expiring in 15 to 20 years.

The difference between the Company’s effective income tax rate and the U.S. statutory income tax rate is as follows:

	Fiscal Year Ended December 31,
	2020				2019				2018
Tax provision at U.S. statutory income tax rate		21.0		%		21.0		%		21.0		%
State income tax, net of federal income tax		2.4				1.0				2.4
Valuation allowances		(2.7	)			(0.4	)			0.6
GILTI and Foreign-Derived Intangible Income		—				(0.6	)			1.1
Foreign earnings		1.3				(1.5	)			0.2
U.S. — foreign rate differential		0.4				(0.6	)			0.4
CARES Act: 5-year NOL carryback		2.9				—				—
Debt exchange – cancellation of debt		8.7				—				—
Outside basis differences		0.3				—				—
Effect of the Act on Federal deferred income tax assets and liabilities		—				—				(1.3	)
Goodwill Impairment		(10.3	)			(17.9	)			—
Uncertain tax positions		(1.4	)			(0.7	)			—
Other		0.3				(0.1	)			(0.4	)
Effective income tax rate		22.9		%		0.2		%		24.0		%

CARES Act: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (“the CARES Act”) was signed into law providing economic relief to companies impacted by the COVID-19 pandemic. One of the provisions of the CARES Act is the 5-year net operating loss carryback, which allows the Company to carry back its 2020 net operating loss to prior years when the federal statutory rate was 35%, thus resulting in the 2.9% effective rate benefit above.

Cancellation of Debt: As mentioned above, the Company and certain of its direct or indirect subsidiaries, completed certain refinancing transactions and as a result a substantial amount of the Company’s debt was extinguished. $59,526 of the cancellation of debt income was excluded from income, which resulted in a tax benefit of 8.7% on the effective tax rate.

Goodwill Impairment: During the third and fourth quarters of 2019, and the first quarter of 2020, the Company recognized non-cash goodwill impairment charges totaling $556,056 and $401,436, respectively. No tax benefit was recognized on $455,689 of the 2019 charge and $336,238 of the 2020 charge, resulting in unfavorable impacts to the income tax rate of 17.9% and 10.3%, respectively.

Other differences between the effective income tax rate and the federal statutory income tax rate are composed primarily of reserves for unrecognized tax benefits, non-deductible meals and entertainment expenses, compensation related items, and the Work Opportunity Tax Credit.

Transition Tax on Unremitted Foreign Earnings: The Tax Cuts and Jobs Act of 2017 (the “Act”) significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions since 1986 (the “Transition Tax”). At December 31, 2020, $4,205 of the Transition Tax remains unpaid and is recorded in “Other long-term liabilities” in the Company’s consolidated balance sheet. The Company has elected to pay the Transition Tax over eight annual installments without interest.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

	Fiscal Year Ended December 31,
	2020			2019			2018
Balance at beginning of year	$	4,891		$	1,320		$	855
Increases related to current period tax positions		8,186			652			40
Increases (decreases) related to prior period tax positions		1,061			3,030			495
Decreases related to settlements		—			—			—
Decreases related to lapsing of statutes of limitations		(248	)		(111	)		(70	)
Balance at end of year	$	13,890		$	4,891		$	1,320

The Company’s total unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $5,790 and $4,891 at December 31, 2020 and 2019, respectively.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company has accrued $949 and $618 for the potential payment of interest and penalties at December 31, 2020 and 2019, respectively. Such amounts are not included in the table above.

The IRS is currently conducting an examination of the year ended December 31, 2015. For U.S. state income tax purposes, tax years 2016-2020 generally remain open; whereas for non-U.S. income tax purposes, tax years 2015 - 2020 generally remain open.