Table:
| October 31, |  |  |
| --- | --- | --- |
|  | 2019 | 2018 |
| (In thousands) |  |  |
| Deferred tax liabilities: |  |  |
| Property, plant and equipment | $148,505 | $88,351 |
| Prepaid and other assets | 1,911 | 1,751 |
| Total deferred tax liabilities | 150,416 | 90,102 |
| Deferred tax assets: |  |  |
| Accrued expenses and accounts receivable | 8,172 | 7,814 |
| Inventory | 1,155 | 2,862 |
| Compensation on restricted stock | 7,528 | 8,280 |
| State income tax credits | 9,333 | 12,235 |
| Other | 1,272 | 654 |
| Valuation allowance | (5,637) | (11,017) |
| Net operating loss | 54,461 | 6,481 |
| Total deferred tax assets | 76,284 | 27,309 |
| Net deferred tax liabilities | $74,132 | $62,793 |
Paragraphs:
Significant components of the Company’s deferred tax assets and liabilities are outlined below.
The increase in the Company's deferred tax liability is primarily attributable to the Company's decision to take bonus depreciation on qualifying assets placed in service during fiscal 2019.
Included in the deferred tax assets at October 31, 2019, is a federal NOL carryforward of $255.4 million. All of the NOL carryforward was incurred subsequent to the enactment of the TCJA and therefore has an indefinite carryforward period. The Company has significant deferred tax liabilities, primarily related to property, plant and equipment, which are expected to reverse and allow for the full utilization of the NOL carryforward. As such, the Company has not recorded a valuation allowance related to the NOL carryforward. Also included in the deferred tax assets are North Carolina Investing in Business Property Credit and North Carolina Jobs Credits totaling $4.9 million, as well as Georgia Job Tax Credits totaling $2.6 million. The North Carolina Investing in Business Property Credit provides a 7% investment tax credit for property located in a North Carolina development area, the North Carolina Creating Jobs Credit provides a tax credit for increased employment in North Carolina, and the Georgia Job Tax Credit provides a tax credit for creation and retention of qualifying jobs in Georgia. It is management’s opinion that the majority of the North Carolina and Georgia income tax credits will not be utilized before they expire, and a $5.6 million valuation allowance has been recorded as of October 31, 2019. The North Carolina credits began to expire during fiscal 2018, and the remaining credits expire between fiscal years 2020 and 2023.
Question:
What is the primary reason for the increase in the Company's deferred tax liability?
Answer: the Company's decision to take bonus depreciation on qualifying assets placed in service during fiscal 2019.