INCOME TAX (Tables)

12 Months Ended

Aug. 31, 2020

Components of earnings from continuing operations before income taxes (benefit)

The components of earnings from continuing operations before income taxes were as follows:


	Year Ended August 31,
(in thousands)	2020		2019		2018
United States	$	334,170	$	194,986	$	86,731
Foreign	36,608		73,474		78,653
Total	$	370,778	$	268,460	$	165,384

Income taxes (benefit) included in the consolidated statements of operations

The income taxes (benefit) included in the consolidated statements of earnings were as follows:


	Year Ended August 31,
(in thousands)	2020		2019		2018
Current:
United States	$	26,901	$	621	$	20,210
Foreign	7,588		14,006		18,308
State and local	7,133		2,892		2,263
Current taxes	41,622		17,519		40,781
Deferred:
United States	45,771		46,922		(11,501)
Foreign	(43)		490		(169)
State and local	5,832		4,908		1,002
Deferred taxes	51,560		52,320		(10,668)
Total income taxes on income	93,182		69,839		30,113
Income taxes (benefit) on discontinued operations	706		158		(34)
Income taxes on continuing operations	$	92,476	$	69,681	$	30,147

Reconciliation of the federal statutory rate to effective tax rate from continuing operations

A reconciliation of the federal statutory rate to the Company's effective income tax rate from continuing operations, including material items impacting the effective income tax rate, is as follows:


	Year Ended August 31,
(in thousands)	2020			2019			2018
Federal statutory rate	21.0		%	21.0		%	25.7		%
Income tax expense at statutory rate	$	77,863		$	56,377		$	42,471
State and local taxes	9,895			6,085			2,317
Foreign tax impairment on valuation of subsidiaries ⁽¹⁾	5,084			(29,697)			22,315
Foreign rate differential ⁽²⁾	(1,346)			(1,466)			(5,973)
Research and experimentation benefits	(1,085)			(580)			(4,707)
Change in valuation allowance	968			36,167			(20,839)
Nontaxable foreign interest ⁽¹⁾	8			(9,799)			(17,414)
TCJA - Toll charge and related foreign tax credits	—			7,410			29,466
TCJA - Remeasurement of deferred tax balances	—			(586)			(25,515)
Audit settlement	—			120			(3,187)
Gain on international restructure ⁽¹⁾	—			—			18,926
Worthless stock deduction ⁽³⁾	—			—			(6,084)
Other	1,089			5,650			(1,629)
Income tax expense on continuing operations	$	92,476		$	69,681		$	30,147
Effective income tax rate from continuing operations	24.9		%	26.0		%	18.2		%

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(1) Fully offset by a valuation allowance.

(2) The impact of global income from operations in jurisdictions with lower statutory tax rates than the U.S., including Poland, which has a statutory income tax rate of 19.0%.

(3) Permanent tax benefit related to a worthless stock deduction from the reorganization and exit of the Company's steel trading business headquartered in the United Kingdom.

Tax effects of significant temporary differences giving rise to deferred tax assets and liabilities

The income tax effects of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:


	Year Ended August 31,
(in thousands)	2020		2019
Deferred tax assets:
Net operating losses and credits	$	283,416	$	295,241
Deferred compensation and employee benefits	32,293		24,432
Reserves and other accrued expenses	30,371		42,833
ROU operating lease liabilities	29,619		—
Other	3,315		19,526
Total deferred tax assets	379,014		382,032
Valuation allowance for deferred tax assets	(281,849)		(283,560)
Deferred tax assets, net	97,165		98,472
Deferred tax liabilities:
Property, plant and equipment	(185,595)		(168,701)
ROU operating lease assets	(28,201)		—
Other	(2,420)		(1,182)
Total deferred tax liabilities	(216,216)		(169,883)
Net deferred tax liabilities	$	(119,051)	$	(71,411)

Reconciliation of the beginning and ending amounts of unrecognized tax benefits

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:


	Year Ended August 31,
(in thousands)	2020		2019		2018
Balance at September 1,	$	8,652	$	3,121	$	9,283

Change for tax positions of prior years	—		5,531		3,121
Reductions due to settlements with taxing authorities	—		—		(8,028)
Reductions due to lapse of statute of limitations	—		—		(1,255)
Balance at August 31, ⁽¹⁾	$	8,652	$	8,652	$	3,121

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(1)The full balance of unrecognized income tax benefits in each year, if recognized, would have impacted the Company’s effective income tax rate at the end of each respective year.