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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes for the years ended December 31, 2023, 2022 and 2021 consisted of the following.
202320222021
U.S.$356.0 $267.5 $121.3 
Non-U.S.675.1 474.7 391.7 
Income before income taxes$1,031.1 $742.2 $513.0 
The following table details the components of the Provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021.
202320222021
Current:
U.S. federal$111.5 $66.5 $(33.1)
U.S. state and local23.7 21.5 5.8 
Non-U.S.181.7 147.4 109.1 
Deferred:
U.S. federal(44.0)(37.3)(19.5)
U.S. state and local(6.9)(5.5)(0.9)
Non-U.S.(26.0)(43.0)(83.2)
Provision (benefit) for income taxes$240.0 $149.6 $(21.8)
Certain prior period amounts within this Note have been reclassified to conform to the current period presentation.
The U.S. federal corporate statutory rate is reconciled to the Company’s effective income tax rate for the years ended December 31, 2023, 2022 and 2021 as follows.
202320222021
U.S. federal corporate statutory rate21.0 %21.0 %21.0 %
State and local taxes, less federal tax benefit1.3 2.0 1.1 
Net effects of foreign tax rate differential1.8 1.5 1.0 
Withholding tax1.5 2.1 3.0 
Repatriation cost(2.0)(3.2)1.4 
Global Intangible Low-Tax Income (“GILTI”)0.7 0.3 2.3 
ASC 740-30 (formerly APB 23)1.7 1.9 2.9 
Valuation allowance changes1.7 0.5 (5.4)
Uncertain tax positions0.9 0.2 (1.3)
Equity compensation(0.6)(0.6)(2.5)
Nondeductible acquisition costs0.4 0.4 0.4 
Foreign Derived Intangible Income (“FDII”) deduction(1.4)(1.6)(3.2)
Tax credits(0.7)(1.1)(0.8)
Income not subject to tax(1.6)(3.5)(3.3)
Utilization of capital loss— — (9.1)
Non-U.S. deferred change related to asset sales— — (8.0)
Return to provision adjustment0.1 — (1.3)
Other, net(1.5)0.3 (2.4)
Effective income tax rate23.3 %20.2 %(4.2)%
The principal items that gave rise to deferred income tax assets and liabilities as of December 31, 2023 and 2022 are as follows.
20232022
Deferred Tax Assets:
Reserves and accruals$80.1 $78.5 
Allowance for credit losses7.8 7.4 
Inventory reserve5.9 4.9 
Pension and postretirement benefit plans
25.3 25.4 
Tax loss carryforwards81.3 107.2 
Deferred taxes recorded in other comprehensive income13.4 0.1 
Foreign tax credit carryforwards57.9 53.8 
Other32.2 31.8 
Total deferred tax assets303.9 309.1 
Valuation allowance(115.7)(107.3)
Deferred Tax Liabilities:
LIFO inventory(20.2)(21.8)
Investment in partnership(35.7)(36.3)
Property, plant and equipment(42.5)(36.0)
Intangible assets(635.4)(663.6)
Unremitted foreign earnings(35.5)(32.4)
Total deferred tax liabilities(769.3)(790.1)
Net deferred income tax liability$(581.1)$(588.3)
The Company believes that it is more likely than not that it will realize its deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below. Tax attributes and related valuation allowances as of December 31, 2023 were as follows.
Tax BenefitValuation AllowanceCarryforward Period Ends
Tax Attributes to be Carried Forward
U.S. federal net operating loss$0.1 $(0.1)2031- 2037
U.S. federal capital loss0.6 (0.6)2028
U.S. federal tax credit57.9 (57.9)2024-2033
Alternative minimum tax credit0.5 (0.1)Unlimited
U.S. state and local net operating losses2.7 — 2026-2041
U.S. state capital loss0.3 (0.1)2028
Non U.S. net operating losses62.8 (38.5)Unlimited
Non U.S. capital losses0.6 (0.6)Unlimited
Excess interest14.2 (14.0)Unlimited
Other deferred tax assets3.8 (3.8)Unlimited
Total tax carryforwards$143.5 $(115.7)
A reconciliation of the changes in the valuation allowance for deferred tax assets for the years ended December 31, 2023, 2022 and 2021 are as follows.
202320222021
Beginning balance$107.3 $106.4 $140.6 
Charged to tax expense6.4 3.1 (27.6)
Charged to other accounts2.0 (2.2)(6.6)
Ending balance$115.7 $107.3 $106.4 
Total unrecognized tax benefits were $19.1 million, $10.8 million and $21.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. The net increase in this balance primarily relates to current year additions to previously established reserves. Included in total unrecognized benefits at December 31, 2023 is $19.1 million of unrecognized tax benefits
that would affect the Company’s effective tax rate if recognized. The balance of total unrecognized tax benefits is not expected to significantly increase or decrease within the next twelve months. Below is a tabular reconciliation of the changes in total unrecognized tax benefits during the years ended December 31, 2023, 2022 and 2021.
202320222021
Beginning balance$10.8 $21.1 $27.8 
Gross increases for tax positions of prior years0.4 0.4 0.8 
Gross decreases for tax positions of prior years— (3.7)— 
Gross increases for tax positions of current year7.9 4.1 5.3 
Settlements— (9.9)— 
Lapse of statute of limitations(0.2)(0.1)(11.8)
Changes due to currency fluctuations0.2 (1.1)(1.0)
Ending balance$19.1 $10.8 $21.1 
The Company includes interest expense and penalties related to unrecognized tax benefits as part of the provision for income taxes. The Company’s income tax liabilities at December 31, 2023 and 2022 include accrued interest and penalties of $2.0 million and $1.1 million, respectively.
The statutes of limitations for U.S. Federal tax returns are open beginning with the 2020 tax year, and state returns are open beginning with the 2014 tax year. The Company was notified during 2023 of a U.S. Federal income tax audit for the tax year 2020.
The Company is subject to income tax in 49 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction with 2013 being the oldest year still open. The Company’s significant operations outside the U.S. are located in the United Kingdom, Germany, China, Ireland, Switzerland, and Singapore. In Germany, a tax audit covering tax years 2015-2019 was closed in Q3 2023. Note that any other liabilities arising from pre-merger tax years for legacy Ingersoll Rand Industrial entities would be similarly indemnified.
The Company does not assert the ASC 740-30 (formerly APB 23) indefinite reinvestment of the Company’s historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. The Company’s deferred income tax liability as of December 31, 2023 was $35.5 million