Table:
| December 31, |  |  |
| --- | --- | --- |
|  | 2019 | 2018 |
| Goodwill and other intangibles | $136,882 | $114,532 |
| Lease arrangements | 31,128 | — |
| Property and equipment | 13,270 | 8,168 |
| Unbilled receivables - IRC Section 481(a) | 5,878 | 8,816 |
| Gross deferred tax liabilities | 187,158 | 131,516 |
| Lease obligations | (34,146) | — |
| Retirement and other liabilities | (18,614) | (20,707) |
| Allowance for potential contract losses and other contract reserves | (2,205) | (1,681) |
| Foreign and state operating loss carryforwards | (2,239) | (1,709) |
| Less: Valuation allowance | 1,828 | 1,537 |
| Gross deferred tax assets | (55,376) | (22,560) |
| Net deferred tax liabilities | $131,782 | $108,956 |
Paragraphs:
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. A summary of the tax effect of the significant components of deferred income taxes is as follows (in thousands):
At December 31, 2019, we had state and foreign net operating losses of approximately $12.2 million and $7.9 million, respectively. The state net operating losses expire beginning 2027 through 2038. We recorded a full valuation allowance against the foreign net operating losses and a partial valuation allowance against the state net operating losses, as we do not believe those losses will be fully utilized in the future.
Question:
How do deferred income taxes arise?
Answer: from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements