20.

Income Taxes

Components of earnings (loss) from continuing operations before income taxes and noncontrolling interests are as follows (in thousands):

Year Ended December 31,

2011

2010

2009

United States

1,241,465

260,794

(353,463

)

Foreign

10,347

6,321

(60,515

)

1,251,812

267,115

(413,978

)

The provision (benefit) for income taxes consists of the following (in thousands):

Year Ended December 31,

2011

2010

2009

Current:

Federal

329,076

(66,462

)

(258,683

)

State

1,685

(19,297

)

(22,274

)

Foreign

2,016

8,289

15,611

Total current

332,777

(77,470

)

(265,346

)

Deferred:

Federal

55,124

138,662

115,630

State

10,400

12,223

(10,354

)

Foreign

(7,473

)

(12,623

)

(16,730

)

Total deferred

58,051

138,262

88,546

Total provision (benefit) for income taxes

390,828

60,792

(176,800

)

A reconciliation of the federal statutory tax rate (35%) to the total provision is as follows:

Year Ended December 31,

2011

2010

2009

Taxes computed at statutory rate

35.00

State income taxes, net of federal income tax benefit

0.63

(1.72

)

5.12

Federal research credit

(0.28

)

(1.19

)

0.84

Domestic manufacturing deduction

(2.21

)

—

(0.13

)

Equity in losses of foreign joint venture

0.64

3.09

(5.93

)

Foreign rate differential

(0.92

)

(3.83

)

2.79

Noncontrolling interests

(2.32

)

(9.47

)

4.77

Other, net

0.68

0.88

0.25

Provision for income taxes

31.22

22.76

42.71

Deferred tax assets and liabilities resulted from the following (in thousands):


	December 31,
	2011			2010
Deferred tax assets:
Accrued liabilities and reserves	$	115,752		$	115,095
Allowance for doubtful accounts		14,088			16,809
Inventory		142,236			140,676
Post-retirement benefits		8,260			17,889
Natural gas hedges		22,433			42,469
Net operating loss carryforward		25,739			50,529
Cumulative translation adjustments		2,254			506
Tax credit carryforwards		39,700			24,000

Total deferred tax assets		370,462			407,973


Deferred tax liabilities:
Holdbacks and amounts not due under contracts		(9,406	)		(13,007	)
Intangibles		(236,627	)		(250,247	)
Property, plant and equipment		(461,915	)		(406,889	)

Total deferred tax liabilities		(707,948	)		(670,143	)


Total net deferred tax liabilities	$	(337,486	)	$	(262,170	)

Current deferred tax assets were $195.9 million at December 31, 2011 ($186.0 million at December 31, 2010). Non-current deferred tax liabilities were $533.4 million at December 31, 2011 ($448.2 million at December 31, 2010). Nucor paid $322.4 million in net federal, state and foreign income taxes in 2011 (received $245.0 million in refunds in 2010 and paid $213.2 million in 2009).

Cumulative undistributed foreign earnings for which U.S. taxes have not been provided are included in consolidated retained earnings in the amount of $168.0 million at December 31, 2011 ($141.0 million at December 31, 2010). These earnings are considered to be indefinitely reinvested and, accordingly, no provisions for U.S. federal and state income taxes are required. It is not practicable to determine the amount of unrecognized deferred tax liability related to the unremitted earnings.

State net operating loss carryforwards were $490.8 million at December 31, 2011 ($843.0 million at December 31, 2010). If unused, they will expire between 2014 and 2031. Foreign net operating loss carryforwards were $66.2 million at December 31, 2011 ($81.2 million at December 31, 2010). If unused, they will expire between 2027 and 2030.

At December 31, 2011, Nucor had approximately $80.9 million of unrecognized tax benefits, of which $78.5 million would affect Nucor's effective tax rate, if recognized. At December 31, 2010, Nucor had approximately $92.8 million of unrecognized tax benefits, of which $85.3 million would affect Nucor's effective tax rate, if recognized.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits recorded in deferred credits and other liabilities is as follows (in thousands):

December 31,

2011

2010

2009

Balance at beginning of year

92,752

108,587

87,734

Additions based on tax positions related to current year

6,733

1,983

2,422

Reductions based on tax positions related to current year

(3,160

)

(1,358

)

—

Additions based on tax positions related to prior years

937

5,705

858

Reductions based on tax positions related to prior years

(2,169

)

(4,046

)

(15,540

)

Additions due to settlements with taxing authorities

—

2,363

36,317

Reductions due to settlements with taxing authorities

(958

)

(3,246

)

(1,288

)

Reductions due to statute of limitations lapse

(13,238

)

(17,236

)

(1,916

)

Balance at end of year

80,897

92,752

108,587

We estimate that in the next twelve months, our gross uncertain tax positions, exclusive of interest, could decrease by as much as $15.5 million, as a result of the expiration of the statute of limitations.

During 2011, Nucor recognized $3.6 million of expense in interest and penalties ($5.3 million of benefit in 2010 and $9.9 million of expense in 2009). As of December 31, 2011, Nucor had approximately $34.3 million of accrued interest and penalties related to uncertain tax positions ($30.6 at December 31, 2010).

Nucor has concluded U.S. federal income tax matters for years through 2006. The 2008 to 2011 tax years are open to examination by the Internal Revenue Service. The years 2004 and 2007 are open to the extent net operating losses were carried back. In 2011 the Canada Revenue Agency completed an audit examination for the periods 2006 to 2008 for Harris Steel Group Inc. and subsidiaries with immaterial adjustments to the income tax returns. The tax years 2008 through 2011 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).