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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
As a global organization, we and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of December 31, 2023, the statute of limitations for the U.S. federal tax years 2017 through 2023 remain open to examination. For U.S. state and local jurisdictions, tax years 2013 through 2023 are open to examination. We are also subject to examination in various foreign jurisdictions for tax years 2016 through 2023.

A reconciliation of the beginning and ending amount of the liability for unrecognized tax benefits is as follows:
($ in millions)202320222021
Balance at January 1$36.5 $24.9 $10.4 
Increase due to current year position6.4 11.4 16.3 
(Decrease) increase due to prior year position(1.0)0.6 (1.0)
Reduction for expiration of statute of limitations/audits(3.1)(0.4)(0.8)
Balance at December 31$38.8 $36.5 $24.9 

In addition, we had balances in accrued liabilities for interest and penalties of $3.8 million and $1.6 million at December 31, 2023 and 2022, respectively. As of December 31, 2023, we had $38.8 million of total gross unrecognized tax benefits, which, if recognized, $38.8 million would favorably impact the effective income tax rate. It is reasonably possible that, due to the expiration of statutes and the closing of tax audits, the amount of gross unrecognized tax benefits may be reduced by approximately $0.1 million during the next twelve months, which would favorably impact our effective tax rate.
The components of income before income taxes and equity in net income of affiliated companies are:
($ in millions)202320222021
U.S. operations$369.4 $394.4 $420.0 
International operations328.6 285.5 328.9 
Total income before income taxes and equity in net income of affiliated companies$698.0 $679.9 $748.9 
The related provision for income taxes consists of:
($ in millions)202320222021
Current:
Federal$30.2 $75.7 $64.8 
State(4.2)8.4 10.9 
International58.8 61.4 74.4 
Current income tax provision84.8 145.5 150.1 
Deferred:
Federal and state(11.6)(20.3)7.3 
International49.1 (10.5)(50.2)
Deferred income tax provision37.5 (30.8)(42.9)
Income tax expense$122.3 $114.7 $107.2 

Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.
The significant components of our deferred tax assets and liabilities at December 31 are:
($ in millions)20232022
Deferred tax assets
Net operating loss carryforwards$10.0 $10.3 
Tax credit carryforwards1.1 1.9 
Pension and deferred compensation22.7 31.4 
Royalty acceleration15.0 46.2 
Other13.9 18.3 
Capitalized R&D expenses23.9 8.1 
Leases18.6 20.6 
Unrealized profit in inventory8.5 7.2 
Valuation allowance(15.5)(13.3)
Total deferred tax assets98.2 130.7 
Deferred tax liabilities:
Property, plant, and equipment61.7 53.7 
Tax on undistributed earnings of subsidiaries3.8 1.5 
Leases18.1 19.7 
Other1.6 4.5 
Total deferred tax liabilities85.2 79.4 
Net deferred tax asset$13.0 $51.3 

A reconciliation of the U.S. federal corporate tax rate to our effective consolidated tax rate on income before income taxes and equity in net income of affiliated companies is as follows:
202320222021
U.S. federal corporate tax rate21.0 %21.0 %21.0 %
Tax on international operations other than U.S. tax rate1.2 (1.5)1.9 
Adjustments to reserves for unrecognized tax benefits0.3 2.9 0.1 
U.S. tax on international earnings, net of foreign tax credits0.5 (0.3)0.3 
Foreign-Derived Intangible Income Deductions (FDII)(1.6)(2.1)(1.5)
State income taxes, net of federal tax effect0.1 1.0 (0.1)
U.S. research and development credits(0.7)(0.6)(0.4)
Excess tax benefits on share-based payments(4.6)(2.4)(4.2)
Royalty acceleration0.5 — (2.5)
Pension settlement— (1.2)— 
Tax on undistributed earnings of subsidiaries0.3 — (0.6)
Other0.5 0.1 0.3 
Effective tax rate17.5 %16.9 %14.3 %
During 2023, we recorded a tax benefit of $32.0 million associated with stock-based compensation. The Company recognized a $3.0 million state tax benefit based on the outcome of a recent court case.

During 2022, we recorded tax expense of $5.7 million due to the impact of tax law changes enacted during the year, $19.8 million of tax expense due to the Company's recognition of reserves for unrecognized tax benefits, and a tax benefit of $16.5 million associated with stock-based compensation. A tax benefit of $20.6 million was recognized for the 2022 termination of our U.S. pension plan. The Company did not elect to reclassify to retained earnings the stranded tax effects on items within AOCI related to the Tax Cuts and Jobs Act of 2017, and therefore included within the $20.6 million pension termination benefit is a deferred tax benefit of $8.0 million.
During 2021, we recorded a tax benefit of $1.4 million due to the impact of tax law changes enacted during 2021, a tax benefit of $18.5 million due to the Company's prepayment of future royalties from one of its subsidiaries, and a tax benefit of $31.5 million associated with stock-based compensation.

State operating loss carryforwards of $118.6 million created a deferred tax asset of $6.7 million, while foreign operating loss carryforwards of $10.2 million created a deferred tax asset of $3.3 million. Management estimates that certain state and foreign operating loss carryforwards are unlikely to be utilized and the associated deferred tax assets have been appropriately reserved. State loss carryforwards expire as follows: $19.8 million in 2024 and $98.8 million thereafter. Foreign loss carryforwards will begin to expire in 2029, while $0.9 million of the total $10.2 million will not expire.

During 2019, we utilized all of our remaining U.S. federal research and development credit carryforwards. State research and development credit carryforwards of $1.6 million created a deferred tax asset of $1.3 million. As of December 31, 2023, $0.4 million of state research and development credits expire in 2025.

Since 2018, West has reasserted indefinite reinvestment related to all post-2017 unremitted earnings in all of our foreign subsidiaries. During 2023 and consistent with the approved plan mentioned in Note 4, Net Income Per Share, the Company began repurchasing common stock on the open market. To support the funding for this program, West may repatriate earnings from its German affiliates during 2024 and has recorded a tax liability of $2.8 million. Accordingly, West will no longer assert permanent reinvestment related to all of the earnings of its wholly owned German affiliates through 2023. West will continue to assert permanent reinvestment of earnings for all other foreign jurisdictions, and intends to only repatriate earnings when the tax impact is de minimis.

Accordingly, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of approximately $857 million of undistributed earnings from foreign subsidiaries (except our German affiliates) to the U.S., as those earnings continue to be permanently reinvested. Further, it is impracticable for us to estimate any future tax costs for any unrecognized deferred tax liabilities associated with our indefinite reinvestment assertion, because the actual tax liability, if any, would be dependent on complex analysis and calculations considering various tax laws, exchange rates, circumstances existing when there is a repatriation, sale or liquidation, or other factors.