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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES
12. INCOME TAXES
2017 Tax Cuts and Jobs Act

In conjunction with the enactment of the 2017 Tax Cuts and Jobs Act (the Tax Act), the Corporation recorded provisional income tax expense of $18.2 million for the year ended December 31, 2017 related to the one-time transition tax on certain foreign earnings. The finalized transition tax of $23.6 million was to be paid over 8 years pursuant to the Tax Act. The transition tax liability, which is expected to be paid in 2025, was $6.1 million and $7.8 million as of December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024, the Corporation reassessed its assertion around whether foreign undistributed earnings should continue to no longer be considered permanently reinvested. The Corporation remains no longer permanently reinvested with the exception of three foreign subsidiaries. The Corporation has recorded a liability for withholding taxes that would arise upon distribution of the Corporation’s foreign undistributed earnings.

Except as noted above, the Corporation remains permanently reinvested to the extent of any outside basis differences in its foreign subsidiaries in excess of the amount of undistributed earnings, as it is not practicable to determine the provision impact, if any, due to the complexities associated with this calculation.
Earnings before income taxes for the years ended December 31 consist of:
(In thousands)202420232022
Domestic$323,898 $300,200 $239,356 
Foreign(1)
198,158 162,870 149,839 
$522,056 $463,070 $389,195 
(1) The Corporation recognized a pre-tax loss of $5 million during the first quarter of 2022 pertaining to the sale of its industrial valve business in Germany.
The provision for income taxes for the years ended December 31 consists of:
(In thousands)202420232022
Current:
Federal$62,165 $58,629 $65,047 
State18,272 13,098 12,717 
Foreign43,200 36,791 34,520 
Total current123,637 108,518 112,284 
Deferred:
Federal(5,507)(180)(11,413)
State950 507 (4,442)
Foreign(2,002)(284)(1,582)
Total deferred(6,559)43 (17,437)
Provision for income taxes$117,078 $108,561 $94,847 
The effective tax rate varies from the U.S. federal statutory tax rate for the years ended December 31, principally:
202420232022
U.S. federal statutory tax rate21.0 %21.0 %21.0 %
Add (deduct):
State and local taxes, net of federal benefit3.0 2.3 1.7 
Foreign earnings(1)
1.1 1.3 0.7 
Foreign loss on sale— — 0.2 
Financing arrangement(2)
(1.0)— — 
R&D tax credits(1.3)(1.1)(1.1)
Foreign-derived intangible income(1.4)(1.2)(1.2)
All other, net1.0 1.1 3.1 
Effective tax rate22.4 %23.4 %24.4 %
(1) Foreign earnings primarily include the net impact of differences between local statutory rates and the U.S. Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances.

(2) In an effort to simplify its organizational structure and facilitate repatriation, the Corporation underwent a substantial internal reorganization of its foreign ownership structure in 2024 that included the establishment of financing arrangements.
The components of the Corporation’s deferred tax assets and liabilities as of December 31 are as follows:
(In thousands)20242023
Deferred tax assets:
Capitalized R&D expenses $60,818 $39,463 
Operating lease liabilities40,840 32,041 
Inventories, net23,926 24,282 
Incentive compensation11,011 9,314 
Environmental reserves9,324 8,949 
Net operating loss6,431 8,348 
Other34,264 30,417 
Total deferred tax assets186,614 152,814 
Deferred tax liabilities:
Goodwill amortization117,340 110,543 
Other intangible amortization62,277 53,551 
Pension and other postretirement assets46,828 37,870 
Operating lease right-of-use assets, net38,741 30,327 
Withholding taxes13,017 16,120 
Depreciation14,880 15,339 
Contract revenue recognition15,256 5,297 
Other3,776 2,863 
Total deferred tax liabilities312,115 271,910 
Valuation allowance4,988 4,892 
Net deferred tax liabilities$130,489 $123,988 
Deferred tax assets and liabilities are reflected on the Corporation’s Consolidated Balance Sheets as of December 31 as follows:
(In thousands)20242023
Net noncurrent deferred tax assets(1)
$10,170 $8,331 
Net noncurrent deferred tax liabilities140,659 132,319 
Net deferred tax liabilities$130,489 $123,988 
(1)Amount is classified within the "Other Assets" caption in the Corporation's Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023, respectively.
The Corporation has income tax net operating loss carryforwards related to international operations of $21.0 million, of which $17.9 million have an indefinite life and $3.1 million which expire through 2029. The Corporation has federal and state income tax net loss carryforwards of $18.5 million, all of which are net operating losses that expire through 2041. The Corporation has recorded a deferred tax asset of $6.4 million, reflecting the benefit of the loss carryforwards related to international and domestic operations.
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. As of December 31, 2024, the Corporation decreased its valuation allowance to $5.0 million, in order to measure only the portion of deferred tax assets that more likely than not will be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth.
Income tax payments, net of refunds, of $135.7 million, $136.4 million, and $61.1 million were made in 2024, 2023, and 2022, respectively.
The Corporation has recorded a liability in Other liabilities for interest of $4.9 million and penalties of $2.5 million as of December 31, 2024.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In thousands)202420232022
Balance as of January 1,$17,888 $17,371 $17,018 
Additions for tax positions of prior periods1,805 2,387 3,004 
Reductions for tax positions of prior periods(2,213)(2,419)(1,732)
Additions for tax positions related to the current year1,747 1,744 1,068 
Settlements(215)(1,195)(1,987)
Balance as of December 31,$19,012 $17,888 $17,371 
In many cases, the Corporation’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities.
The following describes the open tax years, by major tax jurisdiction, as of December 31, 2024:
United States (Federal)2020-present
United States (Various states)2013-present
United Kingdom2023-present
Canada2020-present
The Corporation does not expect any significant changes to the estimated amount of liability associated with its uncertain tax positions through the next twelve months. Included in total unrecognized tax benefits as of December 31, 2024, 2023, and 2022 is $16.2 million, $15.3 million, and $15.1 million, respectively, which if recognized, would favorably impact the effective income tax rate.