Income tax expenses (benefits) shown in the consolidated income statements are reconciled to amounts of tax that would have been payable (recoverable) from the application of the federal tax rate to pre-tax profit, as follows:


(Expressed in thousands)
	For the Years Ended December 31,
	2020				2019				2018
	Amount		Percentage		Amount		Percentage		Amount		Percentage
U.S. federal statutory income tax	$	35,491	21.0	%	$	15,732	21.0	%	$	9,419	21.0	%
U.S. state and local income taxes, net of U.S. federal income tax benefits	8,770		5.2	%	4,258		5.7	%	3,144		7.0	%
Unrecognized tax benefit	(853)		(0.5)	%	—		—	%	—		—	%
Valuation allowance	517		0.3	%	1,663		2.2	%	1,833		4.1	%
Non-taxable income	(580)		(0.3)	%	(738)		(1.0)	%	(637)		(1.4)	%

Provision to return adjustments	239		0.1	%	(723)		(1.0)	%	(326)		(0.7)	%

Change in state and foreign tax rates	238		0.1	%	(135)		(0.2)	%	267		0.6	%
Foreign tax rate differentials	(469)		(0.3)	%	(59)		(0.1)	%	112		0.2	%
Excess tax benefits from share-based awards	(1,008)		(0.6)	%	(234)		(0.3)	%	(81)		(0.2)	%
Other non-deductible expenses	3,669		2.2	%	2,195		3.0	%	2,246		5.0	%
Total income taxes	$	46,014	27.2	%	$	21,959	29.3	%	$	15,977	35.6	%


(Expressed in thousands)
	For the Years Ended December 31,
	2020		2019		2018
Current:
U.S. federal tax	$	17,794	$	9,502	$	10,355
State and local tax	6,498		2,289		2,618
Non-U.S. operations	386		290		231
Total Current	24,678		12,081		13,204
Deferred:
U.S. federal tax	17,182		7,177		395
State and local tax	4,310		2,924		1,438
Non-U.S. operations	(156)		(223)		940
Total Deferred	21,336		9,878		2,773
Total	$	46,014	$	21,959	$	15,977

Pre-tax income with respect to Non-U.S. operations was $1.5 million for the years ended December 31, 2020. Pre-tax loss with respect to Non-U.S. operations was $4.9 million and $4.0 million for the years ended December 31, 2019 and 2018, respectively.

The effective income tax rate for the year ended December 31, 2020 was 27.2% compared with 29.3% for the year ended December 31, 2019. The lower effective tax rate for 2020 was primarily due to lower state and local income taxes, valuation allowance on foreign operations and other non-deductible expenses over higher pre-tax income in the current year compared to 2019.

Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when such differences are expected to reverse. Significant components of the Company's deferred tax assets and liabilities as of December 31, 2020 and 2019 were as follows:


(Expressed in thousands)
	As of December 31,
	2020		2019
Deferred tax assets:
Deferred compensation	$	24,782	$	23,048
Deferred rent and lease incentives	9,951		10,026
Net operating losses and credits	8,664		7,931
Receivable reserves	1,290		1,389
Accrued expenses	407		1,367
Auction rate securities reserves	1,366		1,356
Involuntary conversion	1,693		1,678

Other	1,010		1,203
Total deferred tax assets	49,163		47,998
Valuation allowance	5,059		4,368
Deferred tax assets after valuation allowance	44,104		43,630
Deferred tax liabilities:
Goodwill	41,128		40,774
Partnership investments	32,978		16,163
Company-owned life insurance	13,037		10,028
Depreciation	1,552		110
Other	318		304
Total deferred tax liabilities	89,013		67,379
Deferred tax liabilities, net	$	(44,909)	$	(23,749)

The Company had deferred tax assets at December 31, 2020 of $3.2 million arising from net operating losses incurred by Oppenheimer Israel (OPCO) Ltd. The Company believes that realization of the deferred tax assets is more likely than not based on expectations of future taxable income in Israel. These net operating losses carry forward indefinitely and are not subject to expiration, provided that these subsidiaries and their underlying businesses continue operating normally (as is anticipated). As of December 31, 2020, the Company had deferred tax assets of $3.4 million arising from net operating losses incurred by Oppenheimer Europe Ltd and had recorded full valuation allowances as the Company believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the future.

Goodwill arising from the acquisitions of Josephthal Group Inc. and the Oppenheimer Divisions was amortized for tax purposes on a straight-line basis over 15 years. The difference between book and tax is recorded as a deferred tax liability.

The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and in various states and foreign jurisdictions. The Company has closed tax years through 2016 in the U.S. federal jurisdiction.

The Company has unrecognized tax benefits of $0.2 million, $1.1 million and $1.1 million as of December 31, 2020, 2019 and 2018, respectively (as shown on the table below). Included in the balance of unrecognized tax benefits as of December 31, 2020 and 2019 were $167,000 and $853,000 of tax benefits for either year that, if recognized, would affect the effective tax rate.

During the year ended December 31, 2020, the Company released $1.1 million in unrecognized tax benefits and added $0.2 million related to state and local tax matters. The Company does not believe any unrecognized tax benefit will significantly increase or decrease within twelve months. A reconciliation of the beginning and ending amount of unrecognized tax benefit follows:


(Expressed in thousands)
	2020		2019		2018
Balance at beginning of year	$	1,079	$	1,079	$	1,079
Additions for tax positions of prior years	212		—		—

Lapse in statute of limitations	—		—		—
Settlements with taxing authorities	(1,079)		—		—
Balance at end of year	$	212	$	1,079	$	1,079

In its consolidated income statements, the Company records interest and penalties accruing on unrecognized tax benefits in pre-tax income as interest expense and other expense, respectively. For the year ended December 31, 2020, the Company released tax-related interest expense of $227,000 in its consolidated income statement. For the year ended December 31, 2019, the Company recorded tax-related interest expense of $87,000 in its consolidated income statement. As of December 31, 2020 and 2019, the Company had an income tax-related interest payable of $205,000 and $432,000, respectively, on its consolidated balance sheets.