Entity information:
Income taxes
The provision for taxes on income for the years ended December 31 consists of the following:
 
2017
 
2016
 
2015
Pretax income
 
 
 
 
 
Domestic
$
168,180

 
$
318,702

 
$
255,897

Foreign
146,374

 
122,575

 
72,049

Total pretax income
$
314,554

 
$
441,277


$
327,946

Current
 
 
 
 
 
Federal
$
120,398

 
$
110,567

 
$
55,678

State
5,623

 
10,808

 
6,000

Foreign
40,328

 
40,788

 
31,610

Total current
$
166,349

 
$
162,163

 
$
93,288

Deferred
 
 
 
 
 
Federal
$
(16,797
)
 
$
(861
)
 
$
11,002

State
3,499

 
(869
)
 
(2,359
)
Foreign
(6,462
)
 
4,198

 
(14,193
)
Total deferred
$
(19,760
)
 
$
2,468

 
$
(5,550
)
Total taxes
$
146,589

 
$
164,631

 
$
87,738


Deferred tax liabilities/(assets) are comprised of the following at December 31:
 
2017
 
2016
Property, plant and equipment
$
83,584

 
$
115,946

Intangibles
174,395

 
219,584

Gross deferred tax liabilities
$
257,979

 
$
335,530

Retiree health benefits
$
595

 
$
(971
)
Foreign loss carryforwards
(59,975
)
 
(61,381
)
U.S. Federal loss carryforwards
(17,977
)
 
(10,105
)
Capital loss carryforwards
—

 
(20
)
Employee benefits
(115,771
)
 
(202,085
)
Accrued liabilities and other
(100,031
)
 
(93,142
)
Gross deferred tax assets
$
(293,159
)
 
$
(367,704
)
Valuation allowance on deferred tax assets
$
47,200

 
$
49,797

Total deferred taxes, net
$
12,020

 
$
17,623


Federal loss carryforwards of approximately $69,000 were acquired in the 2017 acquisition of Packaging Holdings. The Company has total federal net operating loss carryforwards of approximately $85,600 remaining at December 31, 2017. These losses are limited based upon future taxable earnings of the respective entities and expire between 2029 and 2037. Foreign subsidiary loss carryforwards of approximately $230,300 remain at December 31, 2017. Their use is limited to future taxable earnings of the respective foreign subsidiaries. Approximately $219,400 of these loss carryforwards do not have an expiration date. Of the remaining foreign subsidiary loss carryforwards, approximately $8,000 expire within the next five years and approximately $2,900 expire between 2023 and 2035. Approximately $14,000 in tax value of state loss carryforwards and $15,000 of state credit carryforwards remain at December 31, 2017. These state loss and credit carryforwards are limited based upon future taxable earnings of the respective entities and expire between 2018 and 2037. State loss and credit carryforwards are reflected at their "tax" value, as opposed to the amount of expected gross deduction due to the vastly different apportionment and statutory tax rates applicable to the various entities and states in which they file.
The Company has recorded a $15,700 deferred tax asset in France primarily related to cumulative net operating losses. These losses have an indefinite carryforward period and the Company expects to utilize them over the next 20 to 25 years. Accordingly, a valuation allowance on the deferred asset has not been provided.
 
A reconciliation of the U.S. federal statutory tax rate to the actual consolidated tax expense is as follows:
  
2017
 
2016
 
2015
Statutory tax rate
$
110,094

 
35.0
 %
 
$
154,447

 
35.0
 %
 
$
114,781

 
35.0
 %
State income taxes, net of federal tax benefit
4,780

 
1.5

 
7,477

 
1.7
 %
 
4,872

 
1.5
 %
Valuation allowance
(3,333
)
 
(1.1
)
 
639

 
0.1
 %
 
(8,080
)
 
(2.5
)%
Tax examinations including change in reserve for uncertain tax positions
4,895

 
1.6

 
732

 
0.2
 %
 
(3,245
)
 
(1.0
)%
Adjustments to prior year deferred taxes
(1,415
)
 
(0.4
)
 
(2,401
)
 
(0.5
)%
 
1,596

 
0.5
 %
Foreign earnings taxed at other than U.S. rates
(16,233
)
 
(5.2
)
 
(15,930
)
 
(3.6
)%
 
(9,065
)
 
(2.8
)%
Disposition of business
537

 
0.2

 
22,810

 
5.2
 %
 
(11,996
)
 
(3.6
)%
Effect of tax rate changes enacted during the year
(22,183
)
 
(7.1
)
 
2,517

 
0.6
 %
 
(2,235
)
 
(0.7
)%
Deduction related to qualified production activities
(5,384
)
 
(1.7
)
 
(5,215
)
 
(1.2
)%
 
(5,968
)
 
(1.8
)%
Transition tax
76,933

 
24.5

 
—

 
—

 
—

 
—

Other, net
(2,102
)
 
(0.7
)
 
(445
)
 
(0.1
)%
 
7,078

 
2.2
 %
Total taxes
$
146,589

 
46.6
 %
 
$
164,631

 
37.3
 %
 
$
87,738

 
26.8
 %


On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, a change in methodology for taxation of earnings from non-US operations, and a one-time transition tax on certain accumulated foreign earnings as of December 31, 2017. The Company has calculated its best estimate of the impact of the Tax Act in its year-end income tax provision in accordance with its understanding of the Tax Act and guidance available as of the date of this filing and as a result has recorded $51,265 as additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was $25,668 of additional benefit. The provisional amount related to the one-time transition tax on certain accumulated foreign earnings was $76,933. Under the provisions of the Tax Act, the transition tax is payable in installments over a period of 8 years. Accordingly, $6,155, the total expected to be paid in 2018, is included in "Accrued taxes" in the Company's Consolidated Balance sheet at December 31, 2017, and the remaining non-current portion of $70,778 is included in "Other Liabilities."
On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations where a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company has recognized the provisional tax impacts related to the one time transition tax and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in 2018 in the quarter the analysis is completed.
The change in “Tax examinations including change in reserve for uncertain tax positions” is shown net of associated deferred taxes and accrued interest. Included in the change are net increases in reserves for uncertain tax positions of approximately $2,600, $3,000 and $3,200 for uncertain items arising in 2017, 2016 and 2015, respectively, combined with adjustments related to prior year items, primarily decreases related to lapses of statutes of limitations in international, federal and state jurisdictions as well as overall changes in facts and judgment. These adjustments decreased the reserve by a total of approximately $(2,300), $(2,300) and $(6,500) in 2017, 2016 and 2015, respectively.
In many of the countries in which the Company operates, earnings are taxed at rates lower than in the U.S. This benefit is reflected in “Foreign earnings taxed at other than U.S. rates” along with other items, if any, that impacted taxes on foreign earnings in the periods presented.
The effect on tax expense for "Disposition of business" in 2016 relates to the sale of the Company's rigid plastic blow molding operations, its retail security packaging operation in Juncos, Puerto Rico, and its paper mill in France. The above adjustment reflects the recognition of tax gains in excess of book gains due to basis differences, and losses on which no future tax benefit will be recognized. For 2015, the adjustment pertains primarily to recognition of beneficial tax attributes related to the disposition of a portion of the Company's metal ends and closures business.
The benefits included in “Adjustments to prior year deferred taxes” for each of the years presented consist primarily of adjustments to deferred tax assets and liabilities arising from changes in estimates. The benefits included in the "Effect of tax rate changes enacted during the year" for 2017 consists of the benefits related to the revaluation of deferred tax assets and liabilities due to the enactment of the Tax Act.
The benefits included in "Valuation allowance" include a benefit of $3,100 related to the revaluation of the valuation allowance due to the enactment of the Tax Act.
As of December 31, 2017, the Company is in the process of evaluating the impact of the Tax Act on its permanent reinvestment assertion. With respect to accumulated earnings of foreign subsidiaries, no additional U.S. federal income taxes or foreign withholding taxes have been provided as all accumulated earnings of foreign subsidiaries are deemed to have been remitted as part of the one-time transition tax. The Company will finalize its analysis during 2018 and, as provided for in SAB 118, will make any necessary adjustments in the financial statements of future periods within the provided time frame, including a determination of our intentions with respect to undistributed earnings of international subsidiaries.

Reserve for uncertain tax positions
The following table sets forth the reconciliation of the gross amounts of unrecognized tax benefits at the beginning and ending of the periods indicated: 
 
2017
 
2016
 
2015
Gross Unrecognized Tax Benefits at January 1
$
17,700

 
$
17,200

 
$
26,000

Increases in prior years’ unrecognized tax benefits
700

 
1,400

 
1,500

Decreases in prior years’ unrecognized tax benefits
(2,400
)
 
(3,500
)
 
(2,100
)
Increases in current year's unrecognized tax benefits
1,600

 
3,000

 
1,700

Decreases in unrecognized tax benefits from the lapse of statutes of limitations
(300
)
 
(100
)
 
(9,200
)
Settlements
(200
)
 
(300
)
 
(700
)
Gross Unrecognized Tax Benefits at December 31
$
17,100

 
$
17,700

 
$
17,200


Of the unrecognized tax benefit balances at December 31, 2017 and December 31, 2016, approximately $15,500 and $15,300, respectively, would have an impact on the effective tax rate if ultimately recognized.
Interest and/or penalties related to income taxes are reported as part of income tax expense. The Company had approximately $2,300 and $2,300 accrued for interest related to uncertain tax positions at December 31, 2017 and December 31, 2016, respectively. Tax expense for the year ended December 31, 2017, includes approximately $100 of interest benefit, which is comprised of an interest benefit of approximately $800 related to the adjustment of prior years' items and interest expense of $700 on unrecognized tax benefits. The amounts listed above for accrued interest and interest expense do not reflect the benefit of a federal tax deduction which would be available if the interest were ultimately paid.
The Company and/or its subsidiaries file federal, state and local income tax returns in the United States and various foreign jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 2012.
The Company believes that it is reasonably possible that the amount reserved for uncertain tax positions at December 31, 2017 will increase by approximately $400 over the next twelve months. This change includes the anticipated increase in reserves related to existing positions offset by settlements of issues currently under examination and the release of existing reserves due to the expiration of the statute of limitations. Although the Company's estimate for the potential outcome for any uncertain tax issue is highly judgmental, management believes that any reasonably foreseeable outcomes related to these matters have been adequately provided for. However, future results may include favorable or unfavorable adjustments to estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, the jurisdictions in which earnings or deductions are realized may differ from current estimates. As a result, the effective tax rate may fluctuate significantly on a quarterly basis. The Company has operations in many countries outside of the United States and the taxes paid on those earnings are subject to varying rates. The Company is not dependent upon the favorable benefit of any one jurisdiction to an extent that loss of those benefits would have a material effect on the Company's overall effective tax rate.
As previously disclosed, the Company received a draft Notice of Proposed Adjustment (“NOPA”) from the Internal Revenue Service (IRS) in February 2017 proposing an adjustment to income for the 2013 tax year based on the IRS's recharacterization of a distribution of an intercompany note made in 2012, and the subsequent repayment of the note over the course of 2013, as if it were a cash distribution made in 2013. In March 2017, the Company received a draft NOPA proposing penalties of $18,000 associated with the IRS’s recharacterization, as well as an Information Document Request (“IDR”) requesting the Company’s analysis of why such penalties should not apply. The Company responded to this IDR in April 2017. On October 5, 2017, the Company received two revised draft NOPAs proposing the same adjustments and penalties as in the prior NOPAs. On November 14, 2017, the Company received two final NOPAs proposing the same adjustments and penalties as in the prior NOPAs. On November 20,  2017, the Company received a Revenue Agents Report (“RAR”) that included the same adjustments and penalties as in the prior NOPAs.  At the time of the distribution in 2012, it was characterized as a dividend to the extent of earnings and profits, with the remainder as a tax free return of basis and taxable capital gain. As the IRS proposes to recharacterize the distribution, the entire distribution would be characterized as a dividend. The incremental tax liability associated with the income adjustment proposed in the RAR would be approximately $89,000, excluding interest and the previously referenced penalties. On January 22, 2018, the Company filed a protest to the proposed deficiency with the IRS, which will cause the matter to be referred to the Appeals Division of the IRS. The Company strongly believes the position of the IRS with regard to this matter is inconsistent with applicable tax laws and existing Treasury regulations, and that the Company's previously reported income tax provision for the year in question is appropriate. However, there can be no assurance that this matter will be resolved in the Company's favor. Regardless of whether the matter is resolved in the Company's favor, the final resolution of this matter could be expensive and time consuming to defend and/or settle. While the Company believes that the amount of tax originally paid with respect to this distribution is correct, and accordingly has not provided additional reserve for tax uncertainty, there is still a possibility that an adverse outcome of the matter could have a material effect on its results of operations and financial condition.
In January 2018, the FASB released guidance on accounting for the global intangible low-taxed income ("GILTI") provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that, subject to an accounting policy election, it will be acceptable to either recognize deferred taxes for temporary differences expected to reverse as GILTI or treat the effects of such a reversal as a current tax item if and when incurred. Currently, the Company has not elected a method and will only do so after its completion of the analysis of the GILTI provisions, as provided for in SAB 118.