years ended December 31 (in millions)	2019			2018			2017
Federal income taxes:
Current	$	83.9		$	15.3		$	129.2
Deferred		31.1			69.6			(239.3	)
Total federal income taxes		115.0			84.9			(110.1	)
State income taxes:
Current		20.5			6.0			14.8
Deferred		(1.5	)		14.1			(0.9	)
Total state income taxes		19.0			20.1			13.9
Foreign income taxes:
Current		2.8			(1.4	)		1.2
Deferred		(0.5	)		2.1			0.5
Total foreign income taxes		2.3			0.7			1.7
Income tax expense (benefit)	$	136.3		$	105.7		$	(94.5	)

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act of 2017 (the 2017 Tax Act). The 2017 Tax Act included provisions that lowered the federal statutory corporate income tax rate from 35% to 21% beginning in 2018, imposed a one-time transition tax on mandatory deemed repatriation of undistributed net earnings and changed how foreign earnings are subject to U.S. tax. U.S. GAAP generally requires the effects of a tax law change to be recorded as a component of income tax expense in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allowed companies to record provisional amounts during a measurement period of up to one year from enactment where the necessary information was not available to complete the accounting for certain income tax effects of the 2017 Tax Act.

The Company recognized, on a provisional basis, a net tax benefit of $258.1 million related to the 2017 Tax Act for the remeasurement of deferred tax assets and liabilities in its consolidated financial statements for the year ended December 31, 2017. In accordance with the provisions of SAB 118, the Company completed the accounting for the impact of the 2017 Tax Act during the year ended December 31, 2018, and as a result recognized income tax expense of $1.1 million for the transition tax on mandatory deemed repatriation of undistributed foreign earnings; income tax expense of $1.5 million for the write-off of deferred tax assets that will not be realized due to changes in the deductibility of executive compensation; and an income tax benefit of $21.5 million primarily related to the accelerated deductions for pension funding, inventory and insurance prepayments that were claimed on the Company’s 2017 income tax returns.

For the year ended December 31, 2018, the benefit related to the utilization of federal net operating loss (NOL) carryforwards, reflected in current tax expense, was $5.8 million.

For the years ended December 31, 2019, 2018 and 2017, foreign pretax earnings were $15.1 million, $5.7 million and $10.6 million, respectively.

The Company’s effective income tax rate varied from the statutory United States income tax rate because of the following
tax differences:

years ended December 31	2019			2018			2017
Statutory income tax rate		21.0	%		21.0	%		35.0	%
(Reduction) increase resulting from:
Effect of statutory depletion		(3.4	)		(3.4	)		(5.6	)
State income taxes, net of federal tax benefit		2.0			2.8			1.5
Change in tax status of subsidiary		(1.7	)		—			—
Stock based compensation		(0.5	)		(0.5	)		(1.0	)
Impact from 2017 Tax Act		—			(3.3	)		(41.7	)
Domestic production deduction		—			—			(2.2	)
Other items		0.8			1.7			(1.3	)
Effective income tax rate		18.2	%		18.3	%		(15.3	%)

The statutory depletion deduction for all years is calculated as a percentage of sales, subject to certain limitations. Due to these limitations, the impact of changes in the sales volumes and earnings may not proportionately affect the Company’s statutory depletion deduction and the corresponding impact on the effective income tax rate.

The Company recognized a net tax benefit from the change in tax status of a subsidiary from a partnership to a corporation in 2019, which reduced income tax expense and increased consolidated net earnings by $15.2 million, or $0.24 per diluted share.

The Company was entitled to receive a 9% tax deduction related to income from domestic (i.e., United States) production activities in 2017. The deduction reduced income tax expense and increased consolidated net earnings by $15.5 million, or $0.25 per diluted share, in 2017. The domestic production deduction was eliminated by the 2017 Tax Act.

The principal components of the Company’s deferred tax assets and liabilities are as follows:

December 31	Deferred Assets (Liabilities)
(in millions)	2019			2018
Deferred tax assets related to:
Inventories	$	62.6		$	52.6
Valuation and other reserves		22.3			22.4
Net operating loss carryforwards		10.5			11.0
Accumulated other comprehensive loss		85.2			84.2
Lease liability		114.7			—
Other items, net		2.9			3.0
Gross deferred tax assets		298.2			173.2
Valuation allowance on deferred tax assets		(9.0	)		(8.6	)
Total net deferred tax assets		289.2			164.6
Deferred tax liabilities related to:
Property, plant and equipment		(700.8	)		(478.3	)
Goodwill and other intangibles		(151.7	)		(170.6	)
Right-of-use assets		(112.1	)		—
Partnerships and joint ventures		(27.4	)		(204.3	)
Employee benefits		(30.2	)		(17.0	)
Total deferred tax liabilities		(1,022.2	)		(870.2	)
Deferred income taxes, net	$	(733.0	)	$	(705.6	)

The Company had $4.1 million and $3.2 million of domestic federal NOL carryforwards at December 31, 2019 and 2018, respectively. The Company had domestic state NOL carryforwards of $161.0 million and $168.1 million at December 31, 2019

and 2018, respectively. These carryforwards have various expiration dates through 2039. At December 31, 2019 and 2018, deferred tax assets associated with these carryforwards were $10.5 million and $11.0 million, respectively, net of the federal benefit of the state deduction, for which valuation allowances of $9.0 million and $8.6 million, respectively, were recorded. The Company also had domestic state tax credit carryforwards of $1.1 million and $1.0 million at December 31, 2019 and 2018, respectively, which have various expiration dates through 2039. At December 31, 2019 and 2018, deferred tax assets associated with these carryforwards were $0.9 million and $0.8 million, respectively, net of the federal benefit of the state deduction.

Deferred tax liabilities for property, plant and equipment result from accelerated depreciation methods being used for income tax purposes as compared with the straight-line method for financial reporting purposes. The increase in 2019 compared with 2018 was primarily driven by the impact of 100% expensing of capital expenditures for tax purposes and by the change in the tax status of a subsidiary from a partnership to a corporation. The majority of the deferred tax liabilities recorded for the Company were related to property, plant and equipment.

Deferred tax liabilities for partnerships and joint ventures relate to the difference between the tax basis in partnerships and joint ventures when compared to the basis for financial reporting purposes. The decrease in 2019 compared with 2018 was a result of the change in the tax status of a subsidiary from a partnership to a corporation, which required the write-off of the deferred tax liability on the partnership investment, and the recording of deferred tax liabilities on the assets owned by the Company.

Deferred tax liabilities related to goodwill and other intangibles reflect the cessation of goodwill amortization for financial reporting purposes, while amortization continues for income tax purposes.

The Company expects to permanently reinvest the earnings from its wholly-owned Canadian and Bahamian subsidiaries, and accordingly, has not provided deferred taxes on the subsidiaries’ undistributed net earnings or basis differences. The Company believes that the tax liability that would be incurred upon repatriation is immaterial at December 31, 2019.

The following table summarizes the Company’s unrecognized tax benefits, excluding interest and correlative effects of $1.7 million and $0.6 million for the years ended December 31, 2019 and 2018, respectively:

years ended December 31 (in millions)	2019			2018			2017
Unrecognized tax benefits at beginning of year	$	24.1		$	22.4		$	21.8
Gross increases – tax positions in prior years		0.4			0.9			1.4
Gross decreases – tax positions in prior years		—			—			(0.7	)
Gross increases – tax positions in current year		1.8			1.8			5.0
Gross decreases – tax positions in current year		(0.8	)		(1.0	)		(0.9	)
Lapse of statute of limitations		—			—			(4.2	)
Unrecognized tax benefits at end of year	$	25.5		$	24.1		$	22.4

Amount that, if recognized, would favorably impact the effective tax rate	$	15.5		$	12.8		$	10.4

Unrecognized tax benefits are reversed as a discrete event if an examination of applicable tax returns is not initiated by a federal or state tax authority within the statute of limitations or upon effective settlement with federal or state tax authorities. Management believes its accrual for unrecognized tax benefits is sufficient to cover uncertain tax positions reviewed during audits by taxing authorities.

The Company anticipates that it is reasonably possible that its unrecognized tax benefits may decrease up to $17.1 million, excluding interest and correlative effects, during the twelve months ending December 31, 2020, due to the expiration of the statutes of limitations for the 2016 and all prior open tax years.

For the year ended December 31, 2017, $3.9 million was reversed into income upon the statute of limitations expiration for the 2010 through 2013 tax years.

The Company’s tax years subject to federal, state or foreign examinations are 2011 through 2019.