
	Year Ended
	December 27, 2020		December 29, 2019		December 30, 2018
	(In thousands)
Current:
Federal	$	(8,800)	$	27,585	$	8,835
Foreign	28,985		78,099		45,311
State and other	9,234		12,847		(1,263)
Total current	29,419		118,531		52,883
Deferred:
Federal	13,864		51,387		41,104
Foreign	19,622		(18,596)		(17,160)
State and other	3,850		9,687		8,596
Total deferred	37,336		42,478		32,540
	$	66,755	$	161,009	$	85,423


	Year Ended
	December 27, 2020		December 29, 2019		December 30, 2018
Federal income tax rate	21.0	%	21.0	%	21.0	%
State tax rate, net	6.7		3.0		3.6
One-time transition tax	—		—		7.9
Global intangible low-taxed income	(7.3)		1.5		4.4
DOJ fine	14.3		—		—
Intercompany financing	(9.5)		(1.6)		(2.0)
Permanent items	1.2		(1.6)		(1.0)
Difference in U.S. statutory tax rate and foreign country effective tax rate	5.4		2.1		2.3
Rate change	5.2		(0.1)		(2.5)
Foreign currency translation	3.0		(0.6)		1.1
Tax credits	(1.4)		(0.7)		(7.9)
Change in reserve for unrecognized tax benefits	0.3		2.7		(1.7)
Change in valuation allowance	1.2		0.1		2.7
Other	1.1		0.3		(2.2)
Total	41.2	%	26.1	%	25.7	%

Included in the change in reserve for unrecognized tax benefits is an increase of 2.6% in the effective tax rate related to a specific transaction undertaken by a Mexico subsidiary of the Company during tax year 2011. The amount was recorded and paid during the year ended December 29, 2019.


	December 27, 2020		December 29, 2019
	(In thousands)
Deferred tax liabilities:
PP&E and identified intangible assets	$	322,660	$	290,427
Inventories	116,226		81,469
Insurance claims and losses	32,679		31,642
Business combinations	54,257		47,450
Incentive compensation	16,204		12,860
Operating lease assets	65,906		68,846
Other	26,968		14,267
Total deferred tax liabilities	634,900		546,961
Deferred tax assets:
U.S. net operating losses	3,034		3,120
Foreign net operating losses	56,213		50,806
Credit carry forwards	15,223		15,575
Allowance for doubtful accounts	4,005		5,429
Accrued liabilities	94,769		51,148
Workers’ compensation	36,759		36,147
Pension and other postretirement benefits	35,899		29,429
Operating lease liabilities	65,906		68,846
Other	21,640		22,502
Total deferred tax assets	333,448		283,002
Valuation allowance	(32,908)		(33,522)
Net deferred tax assets	300,540		249,480
Net deferred tax liabilities	$	334,360	$	297,481

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income and tax-planning strategies in making this assessment.

As of December 27, 2020, the Company believes it has sufficient positive evidence to conclude that realization of its federal, state and foreign net deferred tax assets are more likely than not to be realized. As of December 27, 2020, the Company’s valuation allowance is $32.9 million, of which $12.4 million relates to Moy Park operations, $7.7 million relates to PPL operations, $11.8 million relates to U.S. foreign tax credits and $1.0 million relates to state net operating losses.

As of December 27, 2020, the Company had state net operating loss carry forwards of approximately $77.6 million that begin to expire in 2021. The Company also had Mexico net operating loss carry forwards as of December 27, 2020 of approximately $1.6 million that begin to expire in 2028. The Company also had U.K. net operating loss carry forwards as of December 27, 2020 of approximately $269.2 million that may be carried forward indefinitely.

For the year ended December 27, 2020, there are immaterial tax effects reflected in income tax expense due to excess tax benefits and shortfalls related to stock-based compensation. For the year ended December 29, 2019, there are immaterial tax effects reflected in income tax expense due to excess tax benefits and shortfalls related to stock-based compensation. See “Note 1. General” for additional information.


	December 27, 2020		December 29, 2019
	(In thousands)
Unrecognized tax benefits, beginning of year	$	12,776	$	12,412

Increase as a result of tax positions taken during prior years	731		597

Decrease for lapse in statute of limitations	(236)		(233)

Unrecognized tax benefits, end of year	$	13,271	$	12,776

Included in unrecognized tax benefits of $13.3 million as of December 27, 2020, was $1.1 million of tax benefits that, if recognized, would reduce the Company’s effective tax rate. It is not practicable at this time to estimate the amount of unrecognized tax benefits that will change in the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 27, 2020, the Company had recorded a liability of $2.8 million for interest and penalties. During 2020, accrued interest and penalty amounts related to uncertain tax positions increased by $0.5 million.

The Company operates in the U.S. (including multiple state jurisdictions), Puerto Rico and several foreign locations including Mexico and the U.K. With few exceptions, the Company is no longer subject to examinations by taxing authorities for years prior to 2016 in U.S. federal, state and local jurisdictions, for years prior to 2011 in Mexico, and for years prior to 2017 in the U.K.

As of July 27, 2020, JBS owns in excess of 80% of the outstanding common stock of Pilgrim’s. JBS has a federal tax election to file a consolidated tax return with subsidiaries in which it holds an ownership of at least 80%. The Company is currently analyzing the related impacts to our federal and state tax return filings.

The Company has a tax sharing agreement with JBS USA Holdings effective for tax years beginning 2010. The net tax payable for year 2020 of $0.6 million was accrued in 2020 as a capital contribution and an account payable to a related party in our Consolidated Balance Sheet. The tax sharing agreement was updated during 2020 to consider the impact of Pilgrims’s joining the JBS consolidated tax return.