Page 34 - 2019 Annual Report

NOTES TO FINANCIAL STATEMENTS (continued)

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.

Page 32 ♦ Annual Report Celebrating 25 Years as a Public Company