Pre-tax income from continuing operations (including equity method investment earnings) consisted of the following:

	2020			2019			2018
Current
Federal	$	188.2		$	125.4		$	153.1
State		25.5			22.6			17.8
Foreign		9.5			21.6			32.5
		223.2			169.6			203.4
Deferred
Federal		37.6			40.1			(43.7	)
State		(62.3	)		19.0			17.4
Foreign		2.8			(9.9	)		(2.5	)
		(21.9	)		49.2			(28.8	)
	$	201.3		$	218.8		$	174.6

Income taxes computed by applying the U.S. Federal statutory rates to income from continuing operations before income taxes are reconciled to the provision for income taxes set forth in the Consolidated Statements of Earnings as follows:

	2020			2019			2018
Computed U.S. Federal income taxes	$	219.0		$	188.8		$	285.3
State income taxes, net of U.S. Federal tax impact		29.6			34.1			18.0
Remeasurement of deferred taxes due to U.S. tax legislation		—			—			(241.6	)
Transition tax on foreign earnings		—			(4.6	)		19.8
Tax credits and domestic manufacturing deduction		(9.7	)		(5.6	)		(20.6	)
Federal rate differential on legal reserve		—			—			12.6
Goodwill and intangible impairments		11.2			12.5			—
Remeasurement of deferred taxes due to legal entity reorganization		(40.9	)		16.9			—
State tax impact of combining Pinnacle business		—			(12.0	)		—
Change of valuation allowance on capital loss carryforward		—			(32.2	)		78.6
Other		(7.9	)		20.9			22.5
	$	201.3		$	218.8		$	174.6

Income taxes paid, net of refunds, were $178.0 million, $133.8 million, and $164.1 million in fiscal 2020, 2019, and 2018, respectively.

The tax effect of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:

	May 31, 2020					May 26, 2019
	Assets			Liabilities		Assets			Liabilities
Property, plant and equipment	$	—		$	258.4	$	—		$	240.7
Inventory		19.5			—		15.2			—
Goodwill, trademarks and other intangible assets		—			1,108.4		—			1,187.0
Right-of-use assets		—			51.0		—			—
Accrued expenses		13.4			—		11.8			—
Compensation related liabilities		36.3			—		35.9			—
Pension and other postretirement benefits		35.2			—		54.6			—
Investment in unconsolidated subsidiaries		—			196.2		—			185.4
Lease liabilities		61.3			—		—			—
Other liabilities that will give rise to future tax deductions		88.1			—		123.5			—
Net capital and operating loss carryforwards		753.4			—		766.5			—
Federal credits		17.5			—		18.0			—
Other		52.7			31.8		37.6			24.0
		1,077.4			1,645.8		1,063.1			1,637.1
Less: Valuation allowance		(728.3	)		—		(738.1	)		—
Net deferred taxes	$	349.1		$	1,645.8	$	325.0		$	1,637.1

The liability for gross unrecognized tax benefits at May 31, 2020 was $35.8 million, excluding a related liability of $7.4 million for gross interest and penalties. Included in the balance at May 31, 2020 are $0.7 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. Any associated interest and penalties imposed would affect the tax rate. As of May 26, 2019, our gross liability for unrecognized tax benefits was $44.1 million, excluding a related liability of $11.7 million for gross interest and penalties. Interest and penalties recognized in the Consolidated

Statements of Earnings was a benefit of $4.3 million and expense of $1.2 million and $1.6 million in fiscal 2020, 2019, and 2018, respectively.

The net amount of unrecognized tax benefits at May 31, 2020 and May 26, 2019 that, if recognized, would favorably impact our effective tax rate was $30.3 million and $37.3 million, respectively.

We accrue interest and penalties associated with uncertain tax positions as part of income tax expense.

We conduct business and file tax returns in numerous countries, states, and local jurisdictions. The U.S. Internal Revenue Service ("IRS") has completed its audit of the Company for tax years through fiscal 2018. All resulting significant items for fiscal 2018 and prior years have been settled with the IRS, with the exception of fiscal 2016. Statutes of limitation for pre-acquisition tax years of Pinnacle generally remain open for calendar year 2003 and subsequent years principally related to net operating losses. Other major jurisdictions where we conduct business generally have statutes of limitations ranging from three to five years.

We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $16.0 million over the next twelve months due to various federal, state, and foreign audit settlements and the expiration of statutes of limitations. Of this amount, approximately $6.6 million would reverse through results of discontinued operations.

The change in the unrecognized tax benefits for the year ended May 31, 2020 was:

We have approximately $27.3 million of foreign net operating loss carryforwards ($13.3 million will expire between fiscal 2021 and 2041 and $14.0 million have no expiration dates) and $126.5 million of Federal net operating loss carryforwards which expire between fiscal 2022 and 2027. Federal capital loss carryforwards related to the Private Brands divestiture of approximately $2.6 billion will expire in fiscal 2021. Included in net deferred tax liabilities are $42.1 million of tax effected state net operating loss carryforwards which expire in various years ranging from fiscal 2021 to 2039 and $165.0 million of tax effected state capital loss carryforwards related to the divestiture of Private Brands, the vast majority of which expire in fiscal 2021. Foreign tax credits of $9.7 million will expire between fiscal 2025 and 2030. State tax credits of approximately $11.9 million will expire in various years ranging from fiscal 2021 to 2029.

We have recognized a valuation allowance for the portion of the net operating loss carryforwards, capital loss carryforwards, tax credit carryforwards, and other deferred tax assets we believe are not more likely than not to be realized. The net change in the valuation allowance for fiscal 2020 was a decrease of $9.8 million. For fiscal 2019 and 2018, changes in the valuation allowance were a decrease of $1.5 million and a decrease of $273.8 million, respectively. The current year change principally relates to decreases in the valuation allowances for state net operating losses, charitable contributions and credits.

We believe that our foreign subsidiaries have invested or will invest any undistributed earnings indefinitely, or the earnings will be remitted in a tax-neutral transaction, and, therefore, do not provide deferred taxes on the cumulative undistributed earnings of our foreign subsidiaries.