The effective tax rate from continuing operations was 218.7% in 2018, 31.0% in 2017 and 39.5% in 2016. A reconciliation of the Federal statutory income tax rate to the Company’s effective tax rate is as follows:

	Percent of Income before Income Taxes
	2018			2017			2016
Statutory Federal income tax rate		21.0	%		35.0	%		35.0	%
State income taxes - net of Federal tax benefit		42.5			8.3			3.0
Foreign tax rate differential		3.9			(1.6	)		(0.9	)
Domestic production deduction		—			(5.2	)		(3.2	)
Non-deductible expenses		93.8			0.4			2.9
Impact of tax law changes		22.1			(7.4	)		—
Changes in unrecognized tax benefits		42.9			0.9			(0.8	)
Foreign tax incentives		(3.1	)		—			(0.4	)
Valuation allowances		—			—			3.2
Other		(4.4	)		0.6			0.7
Effective tax rate for the year		218.7	%		31.0	%		39.5	%

Income from continuing operations before income taxes was attributable to the following sources:

	2018		2017		2016
United States	$	419	$	12,979	$	17,010
Foreign		970		2,729		1,709
Totals	$	1,389	$	15,708	$	18,719

Income tax expense (benefit) from continuing operations consisted of the following:

	2018					2017					2016
	Current		Deferred			Current		Deferred			Current		Deferred
Federal	$	9,694	$	(7,910	)	$	6,304	$	(4,394	)	$	5,684	$	(413	)
Foreign		1,218		(718	)		1,821		(883	)		515		741
State and local		1,575		(822	)		2,402		(386	)		641		227
	$	12,487	$	(9,450	)	$	10,527	$	(5,663	)	$	6,840	$	555

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Tax Act”). Effective January 1, 2018, the Tax Act established a corporate income tax rate of 21%, replacing the former 35% rate, and created a territorial tax system rather than a worldwide system, which generally eliminated the U.S. federal income tax on dividends from foreign subsidiaries. The transition to the territorial system included a one-time deemed repatriation transition tax (“Transition Tax”) on certain foreign earnings previously untaxed in the United States. In response to the complexities and timing of issuance of the Tax Act, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) which provided up to a one-year measurement period for companies to finalize the accounting for the impacts of this new legislation. As required, the Company finalized its accounting during 2018 for items previously considered provisional. At December 31, 2017, the Company recorded an initial provisional net benefit to income tax expense of $1.2 million related to the enactment of the Tax Act. This net benefit included a provisional deferred tax benefit of $3.0 million related to revaluing the net U.S. deferred tax liabilities to reflect the lower U.S. corporate tax rate. The deferred tax benefit was offset by a provision of $1.8 million related to the Transition Tax. In general, the Transition Tax imposed by the Tax Act results in the taxation of foreign earnings and profits (“E&P”) at a 15.5% rate on liquid assets and 8% on the remaining unremitted foreign E&P, both net of foreign tax credits. The provisional amounts for the Transition Tax recorded by the Company in 2017 included the undistributed E&P for all the Company’s foreign subsidiaries. Based on the finalized accounting and preparation of the Company’s 2017 U.S. Federal Tax Return, the Company recorded a reduction of income tax expense of $0.3 million for the year ended December 31, 2018 to reflect adjustments to the previously recognized provisional amounts under the Tax Act. In addition, the Company recorded income tax expense of $0.6 million associated with an uncertain tax position related to the calculation of the Transition Tax included in the 2017 return.

During 2018, the Company recorded a provision and related deferred tax liability of $0.6 million related to the earnings of the Company’s subsidiary in Guatemala, which were deemed by management to no longer be permanently reinvested. As noted above, the E&P for all foreign subsidiaries has been previously included in the calculation of the Transition Tax, and thus, should there be a repatriation of earnings from any other foreign subsidiaries in future periods, the Company expects to be subject to only foreign withholding tax. Management does not currently anticipate a repatriation of earnings from any foreign subsidiaries, except as provided above, as these earnings are deemed to be permanently reinvested.

Significant components of the Company’s deferred taxes as of December 31, 2018 and 2017 are as follows:

	2018			2017
Deferred income tax assets
Compensation		2,774			3,030
Inventory valuation		695			502
Allowance for uncollectible accounts		237			268
Provision for loss on note receivable		5,031			—
Non-deductible accruals		4,196			2,195
Non-deductible intangibles		1,574			1,193
State deferred taxes		843			—
Capital loss carryforwards		1,982			1,982
Net operating loss carryforwards		—			405
		17,332			9,575
Valuation allowance		(1,982	)		(1,982	)
		15,350			7,593
Deferred income tax liabilities
Property, plant and equipment	$	4,247		$	6,255
Tax-deductible goodwill		5,089			5,202
State deferred taxes		—			132
Other		744			149
		10,080			11,738
Net deferred income tax asset (liability)	$	5,270		$	(4,145	)

ASC 740, Income Taxes, requires that deferred tax assets be reduced by a valuation allowance, if based on all available evidence, it is more likely than not that the deferred tax asset will not be realized. Available evidence includes the reversal of existing taxable temporary differences, future taxable income exclusive of temporary differences, taxable income in carryback years and tax planning strategies. Based on the current available evidence, the Company considers the net deferred tax asset at December 31, 2018 to be fully realizable except for the deferred tax asset related to the capital loss carryforward described below.

As further discussed in Note 5, the Company sold its investments in certain Brazilian subsidiaries on December 18, 2017. In connection with this divestiture, the Company incurred a capital loss of $9.5 million on its investment in the Myers do Brazil business and recorded a deferred tax asset of $2.0 million as the result of this capital loss carryforward. A valuation allowance of $2.0 million has been recorded against this deferred tax asset as the recovery of the asset is not more likely than not as of December 31, 2018. In addition, in accordance with ASC 740, for the year ended December 31, 2016 the Company allocated $0.6 million of a valuation allowance related to the Brazil Business to income from continuing operations in the Consolidated Statement of Operations, as this valuation allowance related to the change in estimated realizability of the beginning of the year net deferred tax asset in the Brazil Business.

The Company recorded a tax benefit of approximately $15 million generated as a result of a worthless stock deduction for the Novel do Nordeste business included in the divestiture. Although management believes that the worthless stock deduction is valid, there can be no assurance that the IRS will not challenge it and, if challenged, that the Company will prevail. This tax benefit is included in the net loss from discontinued operations in the Consolidated Statements of Operations for the year ended December 31, 2017. As a result of the Company’s U.S. Federal income tax filings in 2018, the Company reduced this estimated tax benefit by $0.7 million and recognized this adjustment within net loss from discontinued operations.

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

	2018		2017			2016
Balance at January 1	$	359	$	478		$	151
Increases related to previous year tax positions		596		359			478
Reductions due to lapse of applicable statute of limitations		—		(478	)		(151	)
Reduction due to settlements		—		—			—
Balance at December 31	$	955	$	359		$	478

The total amount of gross unrecognized tax benefits that would reduce the Company’s effective tax rate was $1.0 million, $0.4 million and $0.5 million at December 31, 2018, 2017 and 2016.

The Company and its subsidiaries file U.S. Federal, state and local, and non-U.S. income tax returns. As of December 31, 2018, the Company is no longer subject to U.S. Federal examinations by tax authorities for tax years before 2015. The Company is subject to state and local examinations for tax years of 2013 through 2017. In addition, the Company is subject to non-U.S. income tax examinations for tax years of 2013 through 2017.