
	2020				2019				2018
(in thousands)	Income from Continuing Operations		Equity in Earnings of Affiliates		Income/(Loss) from Continuing Operations		Equity in Earnings of Affiliates		Income from Continuing Operations		Equity in Earnings of Affiliates
United States	$	280,709	$	2,477	$	31,475	$	741	$	84,812	$	1,989
Foreign	23,248		—		(68)		—		17,292		—
Total	$	303,957	$	2,477	$	31,407	$	741	$	102,104	$	1,989


	2020				2019				2018
(in thousands)	Income from Continuing Operations		Equity in Earnings of Affiliates		Income/(Loss) from Continuing Operations		Equity in Earnings of Affiliates		Income/(Loss) from Continuing Operations		Equity in Earnings of Affiliates
Current:
Federal	$	5,042	$	494	$	(415)	$	148	$	2,824	$	397
State	3,737		124		(12,396)		37		(4,488)		99
Foreign	10,955		—		8,974		—		8,504		—
Total Current	19,734		618		(3,837)		185		6,840		496
Deferred:
Federal	19,039		—		3,717		—		20,479		—
State	2,442		—		(779)		—		1,367		—
Foreign	351		—		(908)		—		901		—
Total Deferred	21,832		—		2,030		—		22,747		—
Total income tax provision	$	41,566	$	618	$	(1,807)	$	185	$	29,587	$	496

A reconciliation of the provision for taxes based on the federal statutory income tax rate on income from continuing operations to our effective income tax rate is as follows for the years ended December 31, 2020, 2019 and 2018:


	2020				2019				2018
	Income from Continuing Operations		Equity in Earnings of Affiliates		Income from Continuing Operations		Equity in Earnings of Affiliates		Income from Continuing Operations		Equity in Earnings of Affiliates
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	3.1		4.0		8.7		4.0		3.5		4.0
Foreign taxes in excess of federal rate	2.2		—		26.2		—		5.9		—

Nontaxable/nondeductible items	(0.6)		—		0.5		—		(3.9)		—
Change in uncertain tax positions	(2.1)		—		1.6		—		(3.1)		—
Research and development credits	(1.9)		—		(17.1)		—		(6.6)		—
Net impact of FAFC indemnity	—		—		(37.4)		—		0.5		—
Return to provision adjustments	(0.4)		—		(4.1)		—		(0.4)		—
Federal tax rate reduction	—		—		(5.9)		—		(1.4)		—

Transition tax	—		—		—		—		12.3		—
IRS exam settlement	(6.2)		—		—		—		—		—
Capital losses utilized	(2.7)		—		—		—		—		—
Other items, net	1.3		—		0.8		—		1.2		—
Effective income tax rate	13.7	%	25.0	%	(5.7)	%	25.0	%	29.0	%	25.0	%

During 2020 we recognized a tax benefit of approximately $26.6 million upon the closure of our 2010-2012 IRS audit examination. In 2019 we recognized a benefit of $15.3 million related to the reversal of the state tax reserves when the statue of limitations expired in our principal state jurisdictions.

As of December 31, 2018, we completed our accounting for the income tax effects of the Tax Cuts and Jobs Act, or TCJA. No further adjustments were made with respect to the previously recorded provisional amounts which included a benefit for the one-time remeasurement of our deferred taxes of $38.0 million. During 2018, we recorded a one-time charge for the transition tax in the amount of $12.5 million. Additionally, we elected to treat the tax impacts of the Global Intangible Low-Taxed Income, or GILTI, as a current period expense when incurred under the period cost method.

As of December 31, 2020, we had $67.6 million of cash in foreign jurisdictions that primarily reflects the undistributed earnings from foreign subsidiaries of approximately $179.0 million. If these earnings are repatriated in the future, an immaterial amount of withholding taxes may be assessed. Currently, all such earnings are intended to be indefinitely reinvested in foreign operations and no incremental US tax or withholding taxes have been provided for these earnings.

Deferred income taxes arise from temporary differences between financial reporting and tax reporting bases of assets and liabilities, and operating loss and tax credit carry-forwards for tax purposes. The components of the deferred income tax assets and liabilities as of December 31, 2020 and 2019 for continuing operations are as follows:


(in thousands)	2020		2019
Deferred tax assets:
Net losses and credit carry-forwards	$	47,489	$	60,329
Contract liabilities	110,653		120,583
Investment in affiliates	1,078		4,626
Employee benefits	28,613		28,468
Accrued expenses and loss reserves	16,118		13,512
Operating lease liabilities	27,311		25,748
Unrealized gains and losses	23,705		14,371
Other	16,751		13,640
Less: valuation allowance	(40,656)		(49,863)
	$	231,062	$	231,414
Deferred tax liabilities:
Depreciable and amortizable assets	305,147		293,151
Operating lease assets	17,768		15,891
Investment in affiliates	—		15,360
	$	322,915	$	324,402
Net deferred tax liability	$	(91,853)	$	(92,988)

As of December 31, 2020, and 2019, we had federal net operating losses (“NOLS”) of $116.7 million and $130.2 million, respectively, which begin to expire in 2022. The state NOLS were $273.5 million and $274.4 million as of December 31, 2020 and 2019, respectively, which begin to expire in 2021. The foreign NOLS were $20.8 million and $25.7 million as of December 31, 2020 and 2019, respectively. As of December 31, 2020, we had available federal and state capital losses of $2.1 million expiring in 2022. A portion of our NOLS and capital losses may be utilized prior to the expiration of carryover statutes. The change of ownership provisions of the Tax Reform Act of 1986 may limit utilization of a portion of our domestic NOL and tax credit carry-forwards to future periods.

As of December 31, 2020, and 2019, we had valuation allowances of approximately $40.7 million and $49.9 million, respectively, against certain US and foreign deferred tax assets. The decrease in the valuation allowance was primarily due to the utilization of capital loss carryforwards against current year capital gains and also the disposition of certain investments. Both the capital losses and the investments had previously been subject to a full valuation allowance.


(in thousands)	2020		2019		2018
Unrecognized tax benefits - opening balance	$	9,993	$	18,040	$	20,325
Gross increases - tax positions in prior period	—		—		58
Gross decreases - tax positions in prior period	(4,803)		(340)		(31)
Gross increases - current-period tax positions	693		1,078		1,362

Settlements with taxing authorities	(2,381)		—		—
FAFC indemnification release	—		(8,362)		—
Expiration of the statute of limitations for the assessment of taxes	(365)		(423)		(3,674)
Unrecognized tax benefits - ending balance	$	3,137	$	9,993	$	18,040

As of December 31, 2020, and 2019, our unrecognized tax benefits of $3.1 million and $10.0 million, respectively, include $3.1 million and $10.0 million, respectively, of unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate.

We recognize a provision for interest and penalties related to uncertain tax positions in income tax expense in the accompanying consolidated statements of operations. For the years ended December 31, 2020, 2019, and 2018, we recognized an insignificant amount of net interest and penalties. As of December 31, 2020, and 2019, we had $0.5 million and $2.0 million, respectively, accrued for the payment of interest and penalties. These balances are gross amounts before any tax benefits and are included in other liabilities in the accompanying consolidated balance sheets.

In July 2020, we closed our 2010-2012 IRS Examination which resulted in the reversal of approximately $6.5 million of unrecognized tax benefits and a reversal of approximately $1.3 million of accrued interest and penalties. Additionally, we recognized a benefit of approximately $18.8 million for recoveries of attributes.

In May 2019, the statute of limitations on the remaining reserves subject to indemnification with FAFC expired, which effectively eliminated the indemnification receivable and also resulted in a discrete tax benefit of $15.3 million.