The C-Corporation Conversion on December 31, 2019 was considered a change in tax status, and therefore, the Company recorded deferred tax assets and liabilities attributable to differences between the carrying amounts and tax basis of existing assets and liabilities on its consolidated balance sheets as of the consummation date of the C-Corporation Conversion. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date for the new tax rates. The Company also recognized a valuation allowance against its deferred tax assets, as the Company deemed it more likely than not that some portion or all of the recorded deferred tax assets will not be realizable in future periods. Prior to December 31, 2019, the Company was not subject to U.S. federal income tax and most state income taxes, as it was structured as a master limited partnership. The taxable income for the Company flowed through to the partners for the fiscal years prior to January 1, 2020 and could vary from the net income reported on the Company’s consolidated statements of operations for the year ended December 31, 2019. Since the Company consummated the C-Corporation Conversion on December 31, 2019, the Company’s taxable income for the year ended December 31, 2019 continued to flow through to the partners.

Additionally as a result of the C-Corporation Conversion, the Company files a consolidated federal income tax return for StoneMor Inc. for all fiscal periods following the consummation date of the C-Corporation Conversion. The Company recognized a $7.5 million tax benefit for the year ended December 31, 2019 related to the projected tax consequences of filing a consolidated federal income tax return for StoneMor Inc. and its subsidiaries. Prior to the C-Corporation Conversion, corporate subsidiaries of the Partnership were historically subject to federal income tax and most state income taxes, and the Partnership was required to file separate federal income tax returns for many of its corporate subsidiaries. Deferred tax assets of the individual corporate subsidiaries could not be offset against the deferred liabilities of other individual corporate subsidiaries.

Income tax (expense) benefit from continuing operations for the years ended December 31, 2020 and 2019 consisted of the following (in thousands):

	Years Ended December 31,
	2020			2019
Current provision:
State	$	(60	)	$	(73	)
Federal		—			—
Foreign		25			(187	)
Total		(35	)		(260	)
Deferred provision:
State		(62	)		(6,704	)
Federal		4,856			(21,210	)
Foreign		96			(30	)
Total		4,890			(27,944	)
Total income tax benefit (expense)	$	4,855		$	(28,204	)

A reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows:

	Years Ended December 31,
	2020			2019
U.S. statutory income tax rate		21.0	%		21.0	%
State and local taxes, net of federal income tax benefit		0.1	%		(4.5	)%
Tax exempt (income) loss		(2.1	)%		(1.2	)%
Valuation allowance		7.0	%		(8.0	)%
Divestiture impact on valuation allowance		(14.4	)%		—	%
Company's earnings not subject to tax		—	%		(0.2	)%
Change in tax status		—	%		(27.2	)%
Permanent differences		(0.1	)%		(2.7	)%
Effective tax rate		11.5	%		(22.8	)%

The effective tax rate increased in 2019 as a result of the deferred tax liabilities the Company had to record in connection with the C-Corporation Conversion. During 2020, the Company received a benefit for federal purposes associated with filing a consolidated return which allows income and losses to be offset among the members of the affiliated group. The temporary differences in 2019 related to these deferred tax liabilities will reverse over the lives of the various cemeteries, which range from an average 100 to 300 years.

The components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

	December 31,
	2020			2019
Deferred tax assets:
Prepaid expenses	$	15,780		$	13,010
State net operating loss		26,015			26,121
Federal net operating loss		86,651			88,818
Foreign net operating loss		9,171			8,656
Other		51			55
Valuation allowance		(101,629	)		(103,336	)
Total deferred tax assets		36,039			33,324
Deferred tax liabilities:
Property, plant and equipment		30,880			28,399
Deferred revenue related to future revenues and accounts receivable		29,480			33,582
Deferred revenue related to cemetery property		5,322			5,875
Total deferred tax liabilities		65,682			67,856
Net deferred tax liabilities	$	29,643		$	34,532

Net deferred tax assets and liabilities were classified on the consolidated balance sheets as follows (in thousands):

	December 31,
	2020		2019
Deferred tax assets	$	9	$	81
Noncurrent assets		9		81
Deferred tax assets		36,030		33,243
Deferred tax liabilities		65,682		67,856
Noncurrent liabilities		29,652		34,613
Net deferred tax liabilities	$	29,643	$	34,532

At December 31, 2020, the Company had available approximately $0.1 million of alternative minimum tax credit carryforwards and approximately $413.0 million and $540.0 million of federal and state net operating loss (“NOL”) carryforwards, respectively, a portion of which expires annually.

Management periodically evaluates all evidence both positive and negative in determining whether a valuation allowance to reduce the carrying value of deferred tax assets is required. The vast majority of the Company’s taxable subsidiaries continue to accumulate deferred tax assets that on a more likely than not basis will not be realized. A full valuation allowance continues to be maintained on these taxable subsidiaries. Along with other previous transfers of the Company’s interests, the Company believes the Recapitalization Transactions in June 2019 caused a “change of control” for income tax purposes, which significantly limits the Company’s ability to use NOLs and certain other tax assets to offset future taxable income. The valuation allowance increased in 2019 due to management’s evaluation of the future limitation on the Company’s ability to offset future deferred tax liabilities with net operating loss carryovers and certain other deferred tax assets.

At December 31, 2020, based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believed it was more likely than not that the Company will realize the benefits of these deductible differences. The amount of deferred tax assets considered realizable could be reduced in the future if estimates of future taxable income during the carryforward period are reduced.

In accordance with applicable accounting standards, the Company recognizes only the impact of income tax positions that, based upon their merits, are more likely than not to be sustained upon audit by a taxing authority. To evaluate its current tax positions in order to identify any material uncertain tax positions, the Company developed a policy of identifying and evaluating uncertain tax positions that considers support for each tax position, industry standards, tax return disclosures and schedules and the significance of each position. It is the Company’s policy to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. At December 31, 2020 and 2019, the Company had no material uncertain tax positions.

The Company is not currently under tax examination by any federal jurisdictions or state income tax jurisdictions. In general, the federal statute of limitations and certain state statutes of limitations are open from 2016 forward. For entities with net operating loss carryovers the statute of limitations is extended to 2013 to the extent of the net operating loss carryover.