
	Fiscal Year Ended
	April 25, 2020		April 27, 2019		April 28, 2018
(Loss) income before taxes
United States	$	(594,431)	$	76,035	$	144,278
International	4,024		30,193		34,985
Total	$	(590,407)	$	106,228	$	179,263


	Fiscal Year Ended
	April 25, 2020		April 27, 2019		April 28, 2018
Current:
Federal	$	18,300	$	(19)	$	5,876
Foreign	7,501		9,207		11,228
State	4,959		3,402		2,243
Total current expense	30,760		12,590		19,347
Deferred:
Federal	(25,918)		9,709		(45,177)
Foreign	164		(53)		(743)
State	(6,046)		1,106		4,862
Total deferred (benefit) expense	(31,800)		10,762		(41,058)
Income tax (benefit) expense	$	(1,040)	$	23,352	$	(21,711)

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted into law. The Tax Act significantly revises the future ongoing U.S. federal corporate income tax by, among other things, lowering the U.S. federal corporate tax rate, implementing a territorial tax system, imposing a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on foreign sourced earnings. Effective January 1, 2018, the Tax Act reduced the U.S. federal corporate tax rate from 35.0% to 21.0%. For the fiscal years ended April 25, 2020 and April 27, 2019, we utilized a 21.0% U.S. federal statutory rate. For the fiscal year ended April 28, 2018, we utilized a blended rate of approximately 30.5%.

Effective for the fiscal year ended April 27, 2019, the Tax Act subjects Patterson to tax on global intangible low-taxed income (“GILTI”). We have made an accounting policy election to treat the impacts of GILTI as a period cost in the period incurred.

For the fiscal year ended April 28, 2018, these impacts resulted in a provisional discrete net tax benefit of $76,648, which included provisional amounts of $81,871 of tax benefit on U.S. deferred tax assets and liabilities, $4,006 of tax expense for a one-time transition tax on unremitted foreign earnings and $1,217 in withholding tax paid on current year distributions. During the fiscal year ended April 27, 2019, we completed our accounting for the previously recorded provisional impacts of the Tax Act and recorded additional remeasurement benefit of $2,355 on U.S. deferred tax assets and liabilities and a reduction to the transition tax cost of $331.

While we have completed our accounting for the impacts of the Tax Act, changes in interpretation of the Tax Act, analysis of proposed and final regulations as they are issued, current and additional guidance from the Internal Revenue Service and/or state legislative actions as well as potential changes in accounting standards surrounding income taxes and the Tax Act may result in further, potentially material, changes to these completed computations.

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit

refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. These benefits did not materially impact the Company’s effective tax rate for the fiscal year ended April 25, 2020. We are continuing to evaluate these tax related provisions as additional guidance from the Internal Revenue Service and/or state tax authorities becomes available.

Deferred tax assets and liabilities are included in other non-current assets and deferred income taxes on the consolidated balance sheets. Significant components of our deferred tax assets (liabilities) were as follows:


	April 25, 2020		April 27, 2019
Deferred tax assets:
Capital accumulation plan	$	2,541	$	3,988
Inventory related items	10,354		4,887
Bad debt allowance	1,857		1,888
Stock based compensation expense	7,486		6,918
Interest rate swap	1,580		4,041
Foreign tax credit	7,248		7,358
Lease liability	16,572		—

Other	2,945		5,053
Gross deferred tax assets	50,583		34,133
Less: Valuation allowance	(14,886)		(11,237)
Total net deferred tax assets	35,697		22,896
Deferred tax liabilities
LIFO reserve	(32,630)		(24,098)
Amortizable intangibles	(69,254)		(77,126)
Goodwill	(11,848)		(43,903)
Property, plant, equipment	(39,999)		(40,793)
Lease right-of-use asset	(16,195)		—
Total deferred tax liabilities	(169,926)		(185,920)
Deferred net long-term income tax liability	$	(134,229)	$	(163,024)

At April 25, 2020, we had a U.S. foreign tax credit asset that will expire in six years. In addition, we have deferred tax assets which would give rise to tax capital losses if triggered in the future. These losses can only be used against capital gain income. At this time, we believe that it is more likely than not that the foreign tax credit and potential capital loss carryforward attributes totaling $14,886 will not be fully utilized prior to expiration. As a result, a full valuation allowance has been established against these assets.

With regard to unremitted earnings of foreign subsidiaries generated after December 31, 2017, we do not currently provide for U.S. taxes since we intend to reinvest such undistributed earnings indefinitely outside of the United States. We continue to apply ASC 740 based on the provisions of the tax law that were in effect immediately prior to the enactment of the new law.

Income tax (benefit) expense varies from the amount computed using the U.S. statutory rate. The reasons for this difference and the related tax effects are shown below.


	Fiscal Year Ended
	April 25, 2020		April 27, 2019		April 28, 2018
Tax at U.S. statutory rate	$	(123,987)	$	22,306	$	54,674
State tax provision, net of federal benefit	(466)		3,492		4,650
Effect of foreign taxes	7,277		2,728		(186)
Goodwill impairment	107,999		—		—
Legal settlement	11,088		—		—
ESOP	(2,393)		(2,465)		(4,036)
Other permanent differences	1,533		1,074		(728)

Tax reform	—		(2,686)		(76,648)
Other	(2,091)		(1,097)		563
Income tax (benefit) expense	$	(1,040)	$	23,352	$	(21,711)

We have accounted for the uncertainty in income taxes recognized in the financial statements in accordance with ASC Topic 740, “Income Taxes”. This standard clarifies the separate identification and reporting of estimated amounts that could be assessed upon audit. The potential assessments are considered unrecognized tax benefits, because, if it is ultimately determined they are unnecessary, the reversal of these previously recorded amounts will result in a beneficial impact to our financial statements.

As of April 25, 2020 and April 27, 2019, Patterson’s gross unrecognized tax benefits were $11,740 and $13,035, respectively. If determined to be unnecessary, these amounts (net of deferred tax assets of $2,113 and $2,225, respectively, related to the tax deductibility of the gross liabilities) would decrease our effective tax rate. The gross unrecognized tax benefits are included in other non-current liabilities on the consolidated balance sheets.


	April 25, 2020		April 27, 2019
Balance at beginning of period	$	13,035	$	14,227
Additions for tax positions related to the current year	1,182		972
Additions for tax positions of prior years	218		50
Reductions for tax positions of prior years	(37)		(228)
Statute expirations	(2,289)		(1,984)
Settlements	(369)		(2)
Balance at end of period	$	11,740	$	13,035

We also recognize both interest and penalties with respect to unrecognized tax benefits as a component of income tax expense. As of April 25, 2020 and April 27, 2019, we had recorded $1,968 and $1,926, respectively, for interest and penalties. These amounts are also included in other non-current liabilities on the consolidated balance sheets. These amounts, net of related deferred tax assets, if determined to be unnecessary, would decrease our effective tax rate. During the year ended April 25, 2020, we recorded as part of tax expense $394 related to an increase in our estimated liability for interest and penalties.

Patterson files income tax returns, including returns for our subsidiaries, with federal, state, local and foreign jurisdictions. During fiscal 2018, the Internal Revenue Service (“IRS”) concluded an audit of fiscal years ended April 25, 2015 and April 30, 2016. The IRS has either examined or waived examination for all periods up to and including our fiscal year ended April 30, 2016, resulting in these periods being closed. In addition to the IRS, periodically, state, local and foreign income tax returns are examined by various taxing authorities. We do not believe that the outcome of these various examinations will have a material adverse impact on our financial statements.