
(In thousands)	2018		2017		2016
United States	$	191,095	$	213,967	$	196,827
Foreign	1,257		(1,123)		2,345
Total earnings before income taxes	$	192,352	$	212,844	$	199,172


(In thousands)	2018		2017		2016
Current:
Federal	$	22,297	$	62,274	$	61,073
State and local	6,416		10,720		10,560
Foreign	1,214		158		466
Total current provision	29,927		73,152		72,099
Deferred:
Federal	12,478		7,614		(2,506)
State and local	1,639		(806)		(110)
Foreign	(243)		—		18
Total deferred provision	13,874		6,808		(2,598)
Provision for income taxes	$	43,801	$	79,960	$	69,501

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law making significant changes to the Internal Revenue Code (“IRC”). The TCJA changes included a reduction of the corporate income tax rate from 35 percent to 21 percent effective for tax years beginning after December 31, 2017, a provision that allows for full expensing of certain qualified property, repeal of the manufacturing deduction, and further limitations on the deductibility of certain executive compensation. The TCJA contains other provisions that are not expected to materially affect the Company, including a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, limitations on the deductibility of interest expense, and the creation of U.S. tax base erosion provisions.

Following the enactment of the TCJA, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”) to provide guidance on the accounting and reporting impacts of the TCJA. For the year ended December 31, 2018, the Company finalized its tax accounting for the TCJA and pursuant to SAB 118 recorded a one-time non-cash charge of $0.6 million related to adjustments to deferred tax amounts provisionally recorded in the prior year. During the year ended December 31, 2017, the Company recorded a provisional one-time non-cash charge of $13.2 million related to the enactment of the TCJA, which resulted from the re-measurement of certain deferred tax assets using the lower U.S. corporate income tax rate.

The Company has historically reinvested all unremitted earnings of our foreign subsidiaries and affiliates, and therefore has not recognized any U.S. deferred tax liability on those earnings. The Company’s intent is to permanently reinvest these funds outside of the U.S.

The provision for income taxes differs from the amount computed by applying the federal statutory rate of 21 percent for 2018 and 35 percent for 2017 and 2016 to income before income taxes for the following reasons for the years ended December 31:


(In thousands)	2018		2017		2016
Income tax at federal statutory rate	$	40,394	$	74,495	$	69,710
State income tax, net of federal income tax impact	6,261		6,011		6,480
Foreign tax rate differential	(598)		(322)		(614)
Section 162(m) permanent addback	894		—		—
Domestic production deduction	—		(5,511)		(5,067)
Share-based payment compensation excess tax benefit	(2,914)		(7683)		—
Federal tax credits	(1,876)		(1,110)		(1736)
Changes in tax law (TCJA)	612		13,210		—
Other	1,028		870		728
Provision for income taxes	$	43,801	$	79,960	$	69,501

At December 31, 2018, the Company had domestic federal income taxes receivable of $10.2 million, domestic state income taxes receivable of $0.4 million, and foreign taxes payable of $0.6 million recorded. At December 31, 2017, the Company had domestic federal income taxes payable of $2.3 million, domestic state income taxes payable of $1.7 million, and foreign taxes receivable of $0.5 million recorded.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows at December 31:


(In thousands)	2018		2017
Deferred tax assets:
Goodwill and other intangible assets	$	3,854	$	5,773
Stock-based compensation	2,956		7,607
Deferred compensation	6,710		5,387
Warranty	10,931		9,282
Inventory	6,375		5,591
Other - domestic	4,276		2,966
Net operating loss and interest carryforwards - foreign	1,467		12
Total deferred tax assets before valuation allowance	36,569		36,618
Less: Valuation allowance - foreign	(1,261)		—
Total deferred tax assets net of valuation allowance	35,308		36,618
Deferred tax liabilities:
Fixed assets	(24,360)		(12,462)




Net deferred tax assets	$	10,948	$	24,156

At December 31, 2018 and 2017, the Company had foreign deferred tax liabilities of $8.5 million and $7.8 million, respectively, related to goodwill and other intangible assets included in other long-term liabilities on the Consolidated Balance Sheets.

As of December 31, 2018, the Company had deferred tax assets recorded related to foreign net operating loss carryforwards of $1.3 million. All of the deferred tax assets at December 31, 2018 related to net operating loss carryforwards have indefinite lives. Based upon historical results and indefinite future operating results, a valuation allowance has been established in the amount of $1.3 million at December 31, 2018.

As of December 31, 2017, the Company had a valuation allowance recorded against other Italian deferred tax assets of $0.8 million. The decrease in the valuation allowance relates to the full release of the $0.8 million booked against the Italian deferred tax assets at December 31, 2017.

The Company has concluded it is more likely than not it will realize the benefit of all other existing deferred tax assets, net of the valuation allowances mentioned above.


(In thousands)	2018		2017		2016
Balance at beginning of period	$	4,145	$	3,747	$	2,854
Changes in tax positions of prior years	114		(174)		214
Additions based on tax positions related to the current year	802		1,255		1,252
Payments	—		(211)		—
Closure of tax years	(736)		(472)		(573)
Balance at end of period	$	4,325	$	4,145	$	3,747

In addition, the total amount of accrued interest and penalties related to taxes, recognized as a liability, was $0.2 million, $0.2 million and $0.2 million at December 31, 2018, 2017 and 2016, respectively.

The total amount of unrecognized tax benefits, net of federal income tax benefits, of $3.9 million, $3.7 million and $2.9 million at December 31, 2018, 2017 and 2016, respectively, would, if recognized, increase the Company’s earnings, and lower the Company’s annual effective tax rate in the year of recognition.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. In the normal course of business, the Company is subject to examinations by taxing authorities in these jurisdictions. For U.S. federal and state income tax purposes, tax years 2017, 2016 and 2015 remain subject to examination.

The Company has assessed its risks associated with all tax return positions, and believes its tax reserve estimates reflect its best estimate of the deductions and positions it will be able to sustain, or it may be willing to concede as part of a settlement. At this time, the Company does not anticipate any change in its tax reserves in the next twelve months. The Company will continue to monitor the progress and conclusion of all audits and will adjust its estimated liability as necessary.