The Company files a consolidated U.S. federal income tax return with its wholly-owned subsidiaries. The following table presents the components of the Company’s income tax provision:


	Year Ended December 31,

	2020		2019		2018
	(In millions)
Current
U.S. federal	$	4.8	$	45.2	$	35.1
State and local	(0.1)		11.5		11.5
	4.7		56.7		46.6
Deferred
U.S. federal	26.1		(8.1)		0.9
State and local	11.7		2.3		3.8
	37.8		(5.8)		4.7
Income tax provision	$	42.5	$	50.9	$	51.3

The following table presents the reconciling items between the income tax provision using the U.S. federal statutory rate and the Company's reported income tax provision.


	Year Ended December 31,

	2020		2019		2018
	(In millions)
Statutory U.S. federal income tax	$	37.9	$	40.3	$	39.6
State income taxes, net of federal benefit	9.1		10.9		12.1

Reserve adjustments	1.2		3.9		2.7





Tax credits and special deductions	(4.6)		(2.7)		(3.7)



Nondeductible compensation	3.4		1.0		0.8
Stock-based compensation excess tax benefits	(4.4)		(2.3)		(0.4)
Other	(0.1)		(0.2)		0.2

Income tax provision	$	42.5	$	50.9	$	51.3

The following table presents a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate on earnings in percentages.


	Year Ended December 31,

	2020		2019		2018
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	5.1		5.7		6.4

Reserve adjustments	0.7		2.0		1.4





Tax credits and special deductions	(2.6)		(1.4)		(2.0)



Nondeductible compensation	1.9		0.5		0.5
Stock-based compensation excess tax benefits	(2.4)		(1.2)		(0.2)
Other	(0.1)		(0.1)		0.1

Effective income tax rate	23.6	%	26.5	%	27.2	%

In 2020, the Company’s effective tax rate was 23.6%. The Company's effective tax rate differed from the 21% statutory federal income tax rate primarily due to state income taxes, uncertain tax positions, and certain expenditures which are permanently not deductible for tax purposes, offset by R&D credits and excess tax benefits related to the Company's stock-based compensation.

In 2019, the Company’s effective tax rate was 26.5%. The Company’s effective tax rate differed from the 21% statutory federal income tax rate primarily due to state income taxes and uncertain tax positions, offset by R&D credits and excess tax benefits related to the Company’s stock-based compensation.

In 2018, the Company’s effective tax rate was 27.2%. The Company’s effective tax rate differed from the 21% statutory federal income tax rate primarily due to state income taxes and unfavorable adjustments to uncertain tax positions partially offset by R&D credits.

The Company is routinely examined by domestic tax authorities. While it is difficult to predict the outcome or timing of a particular tax matter, the Company believes it has adequately provided reserves for any reasonable foreseeable outcome related to these matters.

In the second quarter of 2018, the Internal Revenue Service ("IRS") notified the Company that its federal income tax return for the year ended November 30, 2015, was selected for audit. In the fourth quarter of 2019, the IRS notified the Company that they completed the audit at the field level with no changes and forwarded the Company's case to the Joint Committee on Taxation ("JCT") for a secondary review. In the third quarter of 2020, the IRS closed the audit after the JCT completed its review without exception and refunded the $12.9 million due on the Company's income tax return and carryback claim.

The State of Florida notified the Company they would be opening an income tax audit for the years ended December 31, 2016, through December 31, 2018. The audit began in the first quarter of 2020 and there have been no adjustments noted as of December 31, 2020.

U.S. federal tax returns for the years ended December 31, 2016, through December 31, 2019, remain open to examination. Tax returns for the years ended November 30, 2015, through December 31, 2019, remain open to examination for state income tax jurisdictions.

The following table presents a reconciliation of unrecognized tax benefits:


	Year Ended December 31,

	2020		2019		2018
	(In millions)
Balances at beginning of year	$	58.0	$	7.4	$	4.4
Increases based on tax positions in prior years	2.7		40.4		0.3
Decreases based on tax position in prior years	(51.5)		—		(0.1)
Increases based on tax positions in current year	5.6		10.4		3.5
Lapse of statute of limitations	(0.6)		(0.2)		(0.7)
Balances at end of year	$	14.2	$	58.0	$	7.4

As of December 31, 2020, the total amount of unrecognized tax benefits was $14.2 million which would all affect the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2020, the Company’s accrued interest and penalties related to uncertain tax positions was $0.4 million. It is reasonably possible that a reduction of up to $0.8 million of unrecognized tax benefits and related interest and penalties may occur within the next 12 months as a result of the expiration of certain statutes of limitations.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the Company’s assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined by multiplying such differences by the enacted tax rates expected to be in effect when such differences are recovered or settled.

The following table presents the deferred tax assets and liabilities:


	As of December 31,
	2020		2019
	(In millions)
Deferred Tax Assets
Accrued estimated costs	$	48.4	$	43.2
Basis difference in assets and liabilities	68.5		59.0
Operating lease liabilities	12.3		12.9
Tax losses and credit carryforwards	1.7		3.0
Net cumulative defined benefit pension plan losses	81.5		95.9
Retiree medical and life insurance benefits	6.0		6.2

Total deferred tax assets	218.4		220.2
Deferred Tax Liabilities
Revenue recognition differences	116.7		77.7
Basis differences in intangible assets	9.2		8.6
ROU assets	11.4		12.0
Total deferred tax liabilities	137.3		98.3
Total net deferred tax assets	$	81.1	$	121.9

Realization of deferred tax assets is primarily dependent on generating sufficient taxable income in future periods. The Company believes it is more likely than not its deferred tax assets will be realized. Accordingly, no valuation allowance was recorded for 2020 and 2019.

The Company fully utilized its federal net operating loss carryforwards and income tax credits in 2018. The Company utilized substantially all of its state net operating loss carryforwards in 2019. The Company’s California income tax credit carryovers are $1.0 million as of December 31, 2020, and have no expiration date.