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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income from continuing operations before income taxes consisted of the following:
Years ended December 31
In millions202120202019
Federal (1)
$(11.2)$7.2 $(1.6)
International (2)
638.0 424.9 409.1 
Income from continuing operations before income taxes
$626.8 $432.1 $407.5 
(1) “Federal” reflects United Kingdom (“U.K.”) income (loss) from continuing operations before income taxes.
(2) “International” reflects non-U.K. income from continuing operations before income taxes.
The provision for income taxes consisted of the following:
 Years ended December 31
In millions202120202019
Currently payable (receivable)
Federal (1)
$— $0.1 $— 
International (2)
79.8 70.3 64.2 
Total current taxes79.8 70.4 64.2 
Deferred
International (2)
(9.0)4.6 (18.4)
Total deferred taxes(9.0)4.6 (18.4)
Total provision for income taxes$70.8 $75.0 $45.8 
(1) “Federal” represents U.K. taxes.
(2) “International” represents non-U.K. taxes.
Reconciliations of the federal statutory income tax rate to our effective tax rate were as follows:
 Years ended December 31
Percentages202120202019
U.K. federal statutory income tax rate19.0 %19.0 %19.0 %
Tax effect of international operations (1)
(5.1)(3.9)(8.2)
Change in valuation allowances(0.2)1.3 1.1 
Excess tax benefits on stock-based compensation(1.1)(0.7)(0.7)
Base erosion and anti-abuse tax— 1.7 — 
Unrecognized tax benefits(1.3)— — 
Effective tax rate11.3 %17.4 %11.2 %
(1) The tax effect of international operations consists of non-U.K. jurisdictions.
Reconciliations of the beginning and ending gross unrecognized tax benefits were as follows:
 Years ended December 31
In millions202120202019
Beginning balance$46.3 $47.4 $51.4 
Gross increases for tax positions in prior periods2.5 0.6 0.4 
Gross decreases for tax positions in prior periods(0.7)— (0.8)
Gross increases based on tax positions related to the current year0.2 0.2 0.4 
Gross decreases related to settlements with taxing authorities(0.9)(1.1)(2.9)
Reductions due to statute expiration(10.1)(0.8)(1.1)
Ending balance$37.3 $46.3 $47.4 

We record gross unrecognized tax benefits in Other current liabilities and Other non-current liabilities in the Consolidated Balance Sheets. Included in the $37.3 million of total gross unrecognized tax benefits as of December 31, 2021 was $37.0 million of tax benefits that, if recognized, would impact the effective tax rate. It is reasonably possible that the gross unrecognized tax benefits as of December 31, 2021 may decrease by a range of zero to $3.4 million during 2022, primarily as a result of the resolution of non-U.K. examinations, including U.S. federal and state examinations.
Based on the outcome of these examinations, or as a result of the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that certain unrecognized tax benefits for tax positions taken on previously filed tax returns will materially change from those recorded as liabilities in our financial statements. A number of tax periods from 2009 to present are under audit by tax authorities in various jurisdictions, including Germany, India, Italy, and the U.S. We anticipate that several of these audits may be concluded in the foreseeable future.
We record penalties and interest related to unrecognized tax benefits in Provision for income taxes and Net interest expense, respectively, in the Consolidated Statements of Operations and Comprehensive Income. At December 31, 2021 and 2020, our
liabilities for the possible payment of penalties was $0.2 million at both dates and for the possible payment of interest expense were $3.9 million and $4.6 million, respectively, which are recorded in Other current liabilities in the Consolidated Balance Sheets.
Deferred taxes arise because of different treatment between financial statement accounting and tax accounting, known as “temporary differences.” We record the tax effect of these temporary differences as “deferred tax assets” (generally items that can be used as a tax deduction or credit in future periods) and “deferred tax liabilities” (generally items for which we received a tax deduction but the tax impact has not yet been recorded in the Consolidated Statements of Operations and Comprehensive Income).
Deferred taxes were recorded in the Consolidated Balance Sheets as follows:
 December 31
In millions20212020
Other non-current assets$23.1 $27.4 
Deferred tax liabilities89.8 107.4 
Net deferred tax liabilities$66.7 $80.0 
The tax effects of the major items recorded as deferred tax assets and liabilities were as follows:
 December 31
In millions20212020
Deferred tax assets
Accrued liabilities and reserves$57.8 $59.4 
Pension and other post-retirement compensation and benefits24.6 26.2 
Employee compensation and benefits18.2 18.5 
Tax loss and credit carryforwards729.7 744.5 
Interest limitations67.5 49.9 
Total deferred tax assets897.8 898.5 
Valuation allowance727.2 747.3 
Deferred tax assets, net of valuation allowance170.6 151.2 
Deferred tax liabilities
Property, plant and equipment10.2 5.3 
Goodwill and other intangibles210.4 209.0 
Other liabilities16.7 16.9 
Total deferred tax liabilities237.3 231.2 
Net deferred tax liabilities$66.7 $80.0 

Included in tax loss and credit carryforwards in the table above is a deferred tax asset of $29.6 million as of December 31, 2021 related to foreign tax credit carryover from the tax period ended December 31, 2017 and related to transition taxes. The entire amount is subject to a valuation allowance. The foreign tax credit is eligible for carryforward until the tax period ending December 31, 2027.
As of December 31, 2021, tax loss carryforwards of $2,917.3 million were available to offset future income. A valuation allowance of $684.7 million exists for deferred income tax benefits related to the tax loss carryforwards which may not be realized. We believe sufficient taxable income will be generated in the respective jurisdictions to allow us to fully recover the remainder of the tax losses. The tax losses primarily relate to non-U.S. carryforwards of $2,778.5 million which are subject to varying expiration periods. Non-U.S. carryforwards of $1,895.8 million are located in jurisdictions with unlimited tax loss carryforward periods, while the remainder will begin to expire in 2022. In addition, there were $10.2 million of U.S. federal loss carryforwards with unlimited tax loss carryforward periods and $128.6 million of U.S. state tax loss carryforwards as of December 31, 2021. U.S. state tax losses of $64.3 million are in jurisdictions with unlimited tax loss carryforward periods, while the remainder will expire in future years through 2041.
Taxes have not been provided on undistributed earnings of subsidiaries where it is our intention to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so. It is not practicable to estimate the amount of tax that might be payable if such earnings were to be remitted.
Impacts of U.S. tax legislation
In April 2020, the IRS released final regulations as part of the Tax Cuts and Jobs Act of 2017 that place limitations on the deductibility of certain interest expense for U.S. tax purposes. These regulations resulted in discrete tax expense of approximately $14.1 million in 2020, as well as an increase to our 2020 annual effective tax rate of approximately 0.3%.
In March 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the ability to carryback net operating losses arising in taxable years from 2018 through 2020. The CARES Act provided positive cash benefits of approximately $26.9 million, offset by an increase to our 2020 annual effective tax rate of approximately 1.0% and $5.1 million in discrete tax items recorded in 2020, mainly attributable to base erosion and anti-abuse tax related to 2019.