Income Taxes

3 Months Ended

Mar. 28, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s first quarter 2020 and 2019 effective tax rate from continuing operations was a benefit of 6 percent and 29 percent, respectively.

The current quarter March 28, 2020 effective rate differs from the federal statutory rate of 21 percent primarily due to nondeductible interest expense in the U.S. and lower tax deductions on vested stock compensation, partially offset by benefits from the CARES Act (see below). The effective tax rate benefit for the three months ended March 30, 2019 differs from the federal statutory rate primarily due to tax credits and excess tax deductions on vested stock compensation which vested in that quarter.

On March 27, 2020, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to provide taxpayer protection against the economic impacts of COVID-19. As part of the CARES Act, the Company is able to carry a 2019 tax net operating loss back to tax year 2014 when the U.S. Federal Statutory rate was 35 percent compared with the current 21 percent. The Company has recognized a $7 million tax benefit arising from the remeasured increased value of the tax net operating loss and has recorded a $20 million current receivable related to the refund expected to be received within the next twelve months. Additionally, the Company has a $14 million current receivable related to tax years under examination by the IRS. The Company believes the examination will be completed in time to receive this refund within the next twelve months.

There have been no material changes to the balance of unrecognized tax benefits reported at December 31, 2019.