On December 22, 2017, the U.S. government enacted tax reform. The primary provisions of tax reform affecting the Company in 2018 were a reduction to the corporate income tax rate from 35 percent to 21 percent and a transition from a worldwide corporate tax system to a primarily territorial tax system. The reduction in the corporate income tax rate required the Company to remeasure its U.S. net deferred tax liabilities to the new corporate tax rate and the transition to a territorial tax system required payment of a one-time tax on the deemed repatriation of undistributed and previously untaxed non-U.S. earnings (repatriation tax). The repatriation tax was paid in 2019.

In 2019, the Company was subject to additional provisions of the U.S. tax reform legislation. The Company’s U.S. statutory corporate income tax rate was 21 percent and approximately 23.3 percent for 2019 and 2018, respectively. The main provisions of tax reform affecting the Company in 2019 include a tax on global intangible low-taxed income (GILTI), a tax determined by base erosion and anti-abuse tax benefits (BEAT) for certain payments between a U.S. corporation and foreign subsidiaries, a limitation on the deductibility of certain executive compensation, and interest expense limitations. The combined effect of these provisions did not have a significant effect on the 2019 provision for income taxes.

In 2019 and 2018, the Company recorded discrete tax adjustments related to the remeasurement of the Company’s net deferred tax liabilities to the new corporate income tax rate and for the repatriation tax. The income tax expense (benefit) for the net deferred tax liability remeasurement and the repatriation tax adjustments were as follows (in millions of dollars):


	2019		2018
Net deferred tax liability remeasurement	$	4.8	$	(362.9)
Deemed earnings repatriation tax		(13.9)		20.6
Total discrete tax expense (benefit)	$	(9.1)	$	(342.3)

The repatriation tax expense is based on interpretations of existing laws, regulations, and certain assumptions. The Company continues to analyze the repatriation tax provisions, and monitor legislative and regulatory developments.

The provision (credit) for income taxes by taxing jurisdiction and by significant component consisted of the following (in millions of dollars):

The taxable income of the Company is included in the consolidated U.S. income tax return of Deere & Company. Under a tax sharing agreement with Deere & Company, the Company’s provision (credit) for income taxes is generally recorded as if Capital Corporation and each of its subsidiaries filed separate income tax returns, with a modification for realizability of certain tax benefits. The difference between the provision (credit) for income taxes recorded by the Company and the provision (credit) for income taxes calculated on an unmodified, separate return basis was not significant in 2019 or 2017.

In 2018, the Company recorded a tax benefit under the tax sharing agreement that was $19.0 million higher than an unmodified, separate return basis. The additional tax benefit was related to deductions that were included in the 2018 consolidated U.S. income tax return of Deere & Company at Deere & Company’s 2018 U.S. statutory income tax rate of 23.3 percent. On an unmodified, separate return basis, a net operating loss would have been generated and a deferred tax asset recorded in 2018 at a U.S. statutory income tax rate of 21 percent. The pro forma provision (credit) for income taxes and net income on this basis would have been as follows (in millions of dollars):


	2018
Provision (credit) for income taxes assuming computation on an unmodified, separate return basis	$	(198.2)
Pro forma net income attributable to the Company		780.2

The amounts due from (payable to) Deere & Company under the tax sharing agreement at November 3, 2019 and October 28, 2018 were $(2.5) million and $439.1 million, respectively. The current year tax sharing payable is included in accounts payable and accrued expenses on the consolidated balance sheet. The prior year tax sharing receivable is included in other receivables on the consolidated balance sheet and was settled in November 2018.

A comparison of the statutory and effective income tax provision and reasons for related differences follows (in millions of dollars):

At November 3, 2019, accumulated earnings in certain subsidiaries outside the U.S. totaled $31.3 million. No provision for foreign withholding taxes has been made since these earnings are expected to remain indefinitely reinvested outside the U.S. Determination of the amount of foreign withholding tax liability on these unremitted earnings is not practicable.

Deferred income taxes arise because there are certain items that are treated differently for financial accounting than for income tax reporting purposes. An analysis of deferred income tax assets and liabilities at November 3, 2019 and October 28, 2018 was as follows (in millions of dollars):

At November 3, 2019, tax loss and tax credit carryforwards of $24.6 million were available, with $19.5 million expiring from 2020 through 2039 and $5.1 million with an indefinite carryforward period.

A reconciliation of the total amounts of unrecognized tax benefits at November 3, 2019, October 28, 2018, and October 29, 2017 was as follows (in millions of dollars):

The amount of unrecognized tax benefits at November 3, 2019 and October 28, 2018 that would affect the effective tax rate if the tax benefits were recognized was $17.6 million and $19.4 million, respectively. The remaining liability was related to tax positions for which there are offsetting tax receivables, or the uncertainty was only related to timing. The Company expects that any reasonably possible change in the amounts of unrecognized tax benefits in the next twelve months would not be significant.

The Company files its tax returns according to the tax laws of the jurisdictions in which it operates, which includes the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is included in the consolidated U.S. income tax return and various state returns of Deere & Company. The U.S. Internal Revenue Service has completed the examination of Deere & Company’s federal income tax returns for periods prior to 2015. The years 2015, 2016, and 2017 federal income tax returns are currently under examination. Various state and foreign income tax returns also remain subject to examination by taxing authorities.

The Company’s policy is to recognize interest related to income taxes in interest expense and other income, and recognize penalties in administrative and operating expenses. During 2019, 2018, and 2017, the total amount of expense from interest and penalties was none, $1.8 million, and $.6 million, respectively. The total amount of income from interest and penalties was $5.3 million for 2019 and was not significant in 2018 and 2017. At November 3, 2019 and October 28, 2018, the liability for accrued interest and penalties totaled $14.1 million and $19.2 million, respectively.