Pre-tax income (loss), inclusive of equity method investment earnings, consisted of the following:

A reconciliation of income tax expense using the 21% U.S. statutory tax rate on income from operations, including equity method earnings and before income taxes, compared with the actual provision for income taxes follows:

(a)	In connection with Lamb-Weston/Meijer v.o.f.’s (“LWM”) intent to withdraw from Russia, we reflected a $13.2 million tax detriment as any loss realized upon the sale of shares is a non-deductible permanent difference.

(b)	The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. Excluding the write-off of our portion of LWM’s net investment in Russia, our effective tax rate was 21.4% in fiscal 2022.

Income Taxes Paid

Income taxes paid, net of refunds, were $44.3 million, $84.1 million, and $82.5 million in fiscal 2022, 2021, and 2020, respectively.

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred income tax assets and liabilities were as follows:


	May 29, 2022				May 30, 2021
(in millions)	Assets		Liabilities		Assets		Liabilities
Property, plant and equipment	$	—	$	189.4	$	—	$	187.1
Goodwill and other intangible assets		37.6		—		46.3		—
Compensation and benefit related liabilities		21.0		—		32.2		—
Net operating loss and credit carryforwards (a)		4.5		—		3.6		—
Accrued expenses and other liabilities		14.1		—		13.9		—
Inventory and inventory reserves		8.6		—		5.5		—
Lease obligations		26.9		—		32.0		—
Lease assets		—		25.1		—		30.3
Debt issuance costs		—		0.1		—		2.9
Equity method investments		—		3.4		—		4.7
Other		3.3		17.7		3.5		16.4
		116.0		235.7		137.0		241.4
Less: Valuation allowance (b)		(50.1)		—		(53.1)		—
Net deferred taxes (c)	$	65.9	$	235.7	$	83.9	$	241.4

(a)

At May 29, 2022, Lamb Weston had approximately $7.6 million of gross ($1.6 million after-tax) foreign net operating loss carryforwards, which will not expire. Lamb Weston also had a foreign tax credit carryforward of $1.2 million, which will expire by fiscal 2032, and a state business credit carryforward of $1.7 million, which will expire by fiscal 2036.

(b)	The valuation allowance is predominantly related to non-amortizable intangible assets. The net impact on income tax expense related to changes in the valuation allowance, including net operating loss carryforwards, was zero in fiscal 2022, 2021, and 2020.

(c)

Deferred tax assets of $2.7 million and $2.2 million as of May 29, 2022 and May 30, 2021, respectively, were presented in “Other assets.” Deferred tax liabilities of $172.5 million and $159.7 million as of May 29, 2022 and May 30, 2021, respectively, were presented in “Deferred income taxes” as “Long-term liabilities” on the Consolidated Balance Sheets. The deferred tax asset and liability net position is determined by tax jurisdiction.

The FASB allows companies to adopt an accounting policy to either recognize deferred taxes for global intangible low-taxed income (“GILTI”) or treat them as a tax cost in the year incurred. We have elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, we have not provided deferred taxes on temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period.

We have not established deferred income taxes on accumulated undistributed earnings and other basis differences for operations outside the U.S., as such earnings and basis differences are indefinitely reinvested. Determining the unrecognized deferred tax liability for these earnings is not practicable. Generally, no U.S. federal income taxes will be imposed on future distributions of foreign earnings under the current law. However, distributions to the U.S. or other foreign jurisdictions could be subject to withholding and other local taxes, and these taxes would not be material.

Uncertain Tax Positions

The aggregate changes in the gross amount of unrecognized tax benefits, excluding interest and penalties consisted of the following:


	For the Fiscal Years Ended May
(in millions)	2022			2021	2020
Beginning balance	$	37.1	$	31.3	$	21.7
Decreases from positions established during prior fiscal years		—		—		—
Increases from positions established during current and prior fiscal years		9.5		8.7		10.3
Decreases relating to settlements with taxing authorities		(1.0)		(0.8)		—
Expiration of statute of limitations		(5.2)		(2.1)		(0.7)
Ending balance (a)	$	40.4	$	37.1	$	31.3

(a)

If we were to prevail on the unrecognized tax benefits recorded as of May 29, 2022 and May 30, 2021, it would result in a tax benefit of $34.3 million and $31.6 million, respectively, and a reduction in the effective tax rate. The ending balances exclude $7.3 million and $7.2 million of gross interest and penalties in fiscal 2022 and 2021, respectively. We accrue interest and penalties associated with uncertain tax positions as part of income tax expense.

Lamb Weston conducts business and files tax returns in numerous countries, states, and local jurisdictions. We do not have any significant open tax audits. Major jurisdictions where we conduct business generally have statutes of limitations ranging from three to five years. The expiration of statute of limitations could reduce the uncertain tax positions by approximately $5 million during the next 12 months.

Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that certain U.S. federal, state, and non-U.S. tax audits may be concluded within the next 12 months, which could increase or decrease the balance of our gross unrecognized tax benefits. The estimated impact on income tax expense and net income is not expected to be significant.