Page 137 - Martin Marietta - 2023 Proxy Statement

NOTES TO FINANCIAL STATEMENTS (Continued)

The principal components of the Company’s deferred tax assets and liabilities are as follows:
December 31 Deferred Assets (Liabilities)
(in millions) 2022 2021
Deferred tax assets related to:
Inventories $ 85.5 $ 100.2
Valuation and other reserves 30.9 23.3
Net operating loss carryforwards 3.6 2.6
Accumulated other comprehensive loss 50.1 69.7
Lease liabilities 139.6 150.1
Other items, net 1.9 2.2
Gross deferred tax assets 311.6 348.1
Valuation allowance on deferred tax assets (2.6) (2.8)
Total net deferred tax assets 309.0 345.3
Deferred tax liabilities related to:
Property, plant and equipment (843.8) (840.6)
Goodwill and other intangibles (143.9) (160.2)
Right‐of‐use assets (140.8) (155.2)
Partnerships and joint ventures (32.5) (29.1)
Employee benefits (62.3) (55.5)
Total deferred tax liabilities (1,223.3) (1,240.6)
Deferred income taxes, net $ (914.3) $ (895.3)

The Company had $1.3 million of domestic federal net operating loss (NOL) carryforwards at December 31, 2022 and 2021. The
Company had domestic state NOL carryforwards of $55.3 million and $40.7 million at December 31, 2022 and 2021, respectively.
These carryforwards have various expiration dates through 2042. At December 31, 2022 and 2021, deferred tax assets associated
with these carryforwards were $3.6 million and $2.6 million, respectively, net of the federal benefit of the state deduction, for
which valuation allowances of $2.1 million and $2.2 million, respectively, were recorded. The Company also had domestic state
tax credit carryforwards of $1.3 million and $0.9 million at December 31, 2022 and 2021, respectively, which have various
expiration dates through 2042. At December 31, 2022 and 2021, deferred tax assets associated with these carryforwards were
$1.0 million and $0.7 million, respectively, net of the federal benefit of the state deduction.
The Company expects to reinvest the earnings from its wholly‐owned Canadian and Bahamian subsidiaries indefinitely, 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 was immaterial at December 31, 2022 and 2021.

The following table summarizes the Company’s unrecognized tax benefits, excluding interest and correlative effects of $0.2 million
for the years ended December 31, 2022, 2021 and 2020:

years ended December 31
(in millions) 2022 2021 2020
Unrecognized tax benefits at beginning of year $ 5.4 $ 8.2 $ 25.5
Gross increases – tax positions in prior years — 0.5 0.2
Gross decreases – tax positions in prior years — — —
Gross increases – tax positions in current year 0.2 0.1 0.1
Gross decreases – tax positions in current year — — (0.2)
Lapse of statute of limitations (2.0) (3.4) (17.4)
Unrecognized tax benefits at end of year $ 3.6 $ 5.4 $ 8.2

Amount that, if recognized, would favorably impact
the effective tax rate $ 3.7 $ 5.5 $ 6.4

Annual Report ♦ Page 33