The tax effects of principal temporary differences between the carrying amounts of assets and liabilities and their tax basis are summarized below. Management believes it is more likely than not that the results of future operations will generate sufficient taxable income in the appropriate jurisdiction to realize deferred tax assets, net of valuation allowances. In arriving at this conclusion, we considered the profit before tax generated for the years 2019 through 2021, future reversals of existing taxable temporary differences, and projections of future profit before tax.

We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. The need to establish valuation allowances for deferred tax assets is assessed quarterly. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more likely than not standard for all periods, we consider all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, and our experience with operating loss and tax credit carryforward expirations. A history of cumulative losses is a significant piece of negative evidence used in our assessment. If a history of cumulative losses is incurred for a tax jurisdiction, forecasts of future profitability are not used as positive evidence related to the realization of the deferred tax assets in the assessment.

As of December 31, 2021 and 2020, we had $700.9 million and $806.9 million, respectively, of gross state net operating loss (“NOL”) carryforwards expiring between 2022 and 2041. As of December 31, 2021, we had capital loss carryforwards of $18.8 million that expire between 2024 and 2036. Capital loss carryforwards as of December 31, 2020 were $19.3 million. As of December 31, 2021, we had foreign tax credits (“FTC”) carryforwards of $0.6 million that expire in 2022. U.S. FTC carryforwards as of December 31, 2020 were $17.7 million. The reduction in FTCs in 2021 was the result of FTC expirations of $17.1 million.

As of December 31, 2021 and 2020, we had valuation allowances of $60.6 million and $79.4 million, respectively. As of December 31, 2021, our valuation allowance consisted of $41.2 million for state deferred tax assets related to operating loss carryforwards, $18.8 million for federal and state deferred tax assets related to capital loss carryforwards and $0.6 million for federal deferred tax assets related to FTC carryforwards.

We estimate we will need to generate future federal taxable foreign source income of $2.9 million to fully realize FTC carryforwards before they expire in 2022. We estimate we will need to generate future taxable income of approximately $476.0 million for state income tax purposes during the respective realization periods (ranging from 2022 to 2041) to be able to fully realize the net deferred income tax assets discussed above. We estimate we will need to generate capital gain income of $66.4 million to fully realize our federal capital loss carryforwards before they expire between 2024 and 2026. We estimate we will need to generate capital gain income of $190.7 million to fully realize our state capital loss carryforwards before they expire between 2024 and 2036. Our ability to utilize deferred tax assets may be impacted by certain future events, such as changes in tax legislation or insufficient future taxable income prior to expiration of certain deferred tax assets.


	December 31, 2021			December 31, 2020
Deferred income tax assets (liabilities)
Net operating losses	$	42.5		$	48.7
Postretirement benefits		20.7			22.0
Pension benefit liabilities		11.0			12.0
Deferred compensation		7.9			9.0
Foreign tax credit carryforwards		0.6			17.7
State tax credit carryforwards		8.7			8.9
Capital loss carryforwards		18.8			19.3
Lease right-of-use liabilities		9.8			10.0
Other		12.3			16.2
Total deferred income tax assets		132.3			163.8
Valuation allowances		(60.6	)		(79.4	)
Net deferred income tax assets		71.7			84.4
Intangibles		(87.4	)		(93.7	)
Partnerships and investments		(26.4	)		(28.1	)
Accumulated depreciation		(80.4	)		(75.5	)
Prepaid pension costs		(27.8	)		(30.7	)
Inventories		(4.9	)		(4.4	)
Lease right-of-use assets		(10.1	)		(10.2	)
Other		(1.6	)		(0.2	)
Total deferred income tax liabilities		(238.6	)		(242.8	)
Net deferred income tax liabilities	$	(166.9	)	$	(158.4	)


	2021		2020			2019
Details of taxes
Earnings (loss) from continuing operations before income taxes
Domestic	$	239.3	$	(130.0	)	$	299.7
Foreign		3.4		3.3			(0.3	)
Total	$	242.7	$	(126.7	)	$	299.4

Income tax expense (benefit):
Current:
Federal	$	39.4	$	40.8		$	31.4
Foreign		0.6		1.0			0.8
State		8.7		5.6			6.3
Total current		48.7		47.4			38.5

Deferred:
Federal		3.6		(75.5	)		15.1
Foreign		0.6		-			(0.3	)
State		4.5		(14.5	)		3.8
Total deferred		8.7		(90.0	)		18.6

Total income tax expense (benefit)	$	57.4	$	(42.6	)	$	57.1

We reviewed our position with regards to foreign unremitted earnings and determined that unremitted earnings will not be permanently reinvested as a result of the Sale. Accordingly, in 2021, we recorded foreign withholding taxes of $0.7 million on approximately $13.0 million of net undistributed earnings of foreign subsidiaries. In 2020, we recorded foreign withholding taxes of $0.9 million on approximately $17.9 million of net undistributed earnings of foreign subsidiaries.


	2021			2020			2019
Reconciliation to U.S. statutory tax rate
Continuing operations tax expense (benefit) at statutory rate	$	51.0		$	(26.6	)	$	62.9
(Decrease) increase in valuation allowances on deferred domestic income tax assets		(17.8	)		(0.1	)		0.1
Expiration of deferred income tax assets		18.3			-			-
State income tax expense (benefit), net of federal impact		11.0			(7.3	)		12.4
Capital loss on sale of investment		-			(4.6	)		-
Statute closures		(3.8	)		(1.3	)		(3.8	)
State deferred tax adjustments		-			(1.5	)		(1.9	)
Capital loss utilization on WAVE earnings		-			-			(4.4	)
Excess tax benefits on share-based compensation		(0.8	)		(0.9	)		(3.2	)
Tax on foreign and foreign source income		-			-			(1.9	)
U.S. permanent differences		(1.3	)		(2.2	)		(1.8	)
Other		0.8			1.9			(1.3	)
Tax expense (benefit) at effective rate	$	57.4		$	(42.6	)	$	57.1

We recognize the tax benefits of an uncertain tax position only if those benefits are more likely than not to be sustained based on existing tax law. Additionally, we establish a reserve for tax positions that are more likely than not to be sustained based on existing tax law, but uncertain in the ultimate benefit to be sustained upon examination by the relevant taxing authorities. Unrecognized tax benefits are subsequently recognized at the time the more likely than not recognition threshold is met, the tax matter is effectively settled or the statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired, whichever is earlier.

We had $35.6 million of Unrecognized Tax Benefits (“UTB”) as of December 31, 2021, $17.8 million ($16.8 million, net of federal benefit) of this amount, if recognized in future periods, would impact the reported effective tax rate.

It is reasonably possible that certain UTB’s may increase or decrease within the next twelve months due to tax examination changes, settlement activities, expirations of statute of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities. Over the next twelve months we estimate that UTB’s may decrease by $1.4 million related to state statutes expiring.

We account for all interest and penalties on uncertain income tax positions as income tax expense. We have $2.5 million of interest and penalties accrued in non-current income tax payable in the Consolidated Balance Sheet as of December 31, 2021.

We had the following activity for UTB’s for the years ended December 31, 2021, 2020 and 2019:


	2021			2020			2019
Unrecognized tax benefits balance at January 1,	$	41.7		$	34.7		$	42.6
Gross change for current year positions		1.7			2.3			2.2
Increase for prior period positions		-			8.7			-
Decrease for prior period positions		(3.6	)		-			(2.1	)
Decrease due to statute expirations		(4.2	)		(4.0	)		(8.0	)
Unrecognized tax benefits balance at December 31,	$	35.6		$	41.7		$	34.7

We file income tax returns in the U.S. and various states and international jurisdictions. In the normal course of business, we are subject to examination by taxing authorities in Canada and the United States. Generally, we have open tax years subject to tax audit on average of between three years and six years. The statute of limitations is no longer open for U.S. federal returns before 2016. With few exceptions, the statute of limitations is no longer open for state or non-U.S. income tax examinations for years before 2018. The 2016 statute of limitations for our U.S. federal return was extended to May 31, 2023 as a result of an ongoing Federal audit. The 2017 statute of limitations for our U.S. federal return expired in October 2021, excluding the 2017 Section 965 Transition Tax, which has a

statute period of six years. Under the Tax Cuts and Jobs Act of 2017, the Section 965 Transition Tax related to cumulative earnings and profits of certain foreign subsidiaries that were previously not repatriated and therefore not taxed for U.S. income tax purposes. Except for extending the 2016 statute of limitations, we have not significantly extended any open statutes of limitation for any major jurisdiction and have reviewed and accrued for, where necessary, tax liabilities for open periods.

In 2021, we recorded a $5.9 million ERC benefit, representing a refundable payroll tax credit for eligible wages paid to our employees in 2020 and 2021 under the CARES Act. We accounted for the ERC by applying the grant model. Based on our evaluation, we recognized the ERC benefit during 2021, primarily as an offset to payroll tax expenses within cost of goods sold and SG&A expenses in our Consolidated Statements of Operations and Comprehensive Income.