Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Income Taxes
The Company recorded an income tax provision of $4.2 million and an income tax benefit of $50.1 million for the three months ended September 30, 2017 and 2016, respectively, and an income tax provision of $11.0 million and an income tax benefit of $46.2 million for the nine months ended September 30, 2017 and 2016, respectively. In general, our effective rate differs from the federal income tax rate due to the effects of foreign tax rate differences, changes in unrecognized tax benefits, changes in valuation allowance, and deferred tax expense on amortization of indefinite-lived intangible assets. The income tax benefit for the nine months ended September 30, 2016 was primarily attributable to the release of valuation allowance due to deferred tax liabilities created in the EMC Acquisition of $53.9 million, offset by foreign income taxes of $4.8 million resulting from the foreign subsidiaries' contribution to pretax income, withholding taxes of $2.7 million and effects of permanent differences.
Due to uncertainty as to the realization of benefits from the Company's U.S. and certain international net deferred tax assets, including net operating loss carryforwards, the Company has a full valuation allowance reserved against such net deferred tax assets. The Company intends to continue to maintain a full valuation allowance on certain jurisdictions’ net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.
As of September 30, 2017 and December 31, 2016, the liability for income taxes associated with uncertain tax positions was $11.9 million and $11.0 million, respectively. The net increase in the liability during 2017 was primarily attributable to reserves for tax positions taken by one of the Company’s Canadian subsidiaries. As of September 30, 2017 and December 31, 2016, the Company had accrued $7.9 million and $6.1 million, respectively, of interest and penalties related to uncertain tax positions.
It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions may significantly decrease within the next 12 months. This change may be the result of ongoing audits or the expiration of federal and state statutes of limitations for the assessment of taxes.
In December 2017, the United States enacted new U.S. federal tax legislation known as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the U.S. corporate income tax regime by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. We have performed preliminary analyses of the impacts of the Tax Act using information known or knowable at this time.
Under these preliminary analyses, we estimate that we will record additional GAAP tax benefits in the fourth quarter of 2017 in a range of $5 million to $8 million related to a decrease in the valuation of our deferred tax liabilities. The impact of the Tax Act may however differ from our preliminary estimate due to, among other things, changes in interpretations and assumptions we have made, U.S. Internal Revenue Service and Treasury Department guidance that may be issued and actions we may take. Our management is still evaluating the effects of the Tax Act provisions, and this preliminary assessment above does not purport to disclose all changes of the Tax Act that could have material positive or negative impacts on our current or future tax position.
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