Income Taxes |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Income Taxes
For the three months ended March 31, 2018 and 2017, the Company’s provision for income taxes, as a percentage of income before income taxes was 79.5 percent and 44.0 percent, respectively, compared with U.S. federal statutory rates of 21.0 percent and 35.0 percent, respectively.
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three months ended March 31, 2018, was primarily attributed to current year foreign losses, primarily related to China, that presently do not provide future tax benefit, as well as net unfavorable foreign items.
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three months ended March 31, 2017, was primarily attributed to current year foreign losses, primarily related to China, that presently do not provide future tax benefit and an adjustment of a prior year deferred tax asset related to foreign currency translation amounts offset by net favorable foreign items related to tax rate differences.
In December 2017, the Tax Cuts and Jobs Act (Tax Reform Act) was signed into law. During the year ended December 31, 2017, the Company recognized provisional tax impacts related to the re-measurement of its deferred income tax assets and liabilities in accordance with the Tax Reform Act and related guidance provided by SAB 118. Additionally, it was estimated at December 31, 2017 that the Company would have no one-time, transition tax on deemed repatriation. As of March 31, 2018, no additional adjustments related to these items have been made; however, adjustments may be necessary in future periods due to the significant complexity of the Tax Reform Act and anticipated additional regulatory guidance or technical corrections that may be forthcoming as well as actions the Company may take as a result of tax reform.
Because of the complexity of the new Global Intangible Low-taxed Income (GILTI) rules and the Foreign Derived Intangible Income (FDII) rules, we are continuing to evaluate these provisions of the Tax Reform Act and the application of ASC 740. We are continuing to gather additional information and expect to complete our accounting within the prescribed measurement period.
The Company’s U.S. federal income tax returns for 2014 through 2016, are open to examination for federal tax purposes. The Company has several foreign tax jurisdictions that have open tax years from 2011 through 2017.
As of March 31, 2018 and December 31, 2017, the Company had accrued $4.7 million and $4.6 million, respectively, related to unrecognized tax positions. This net increase was primarily attributed to increases in transfer pricing contingencies.
Interim income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete tax items in the period in which they occur. Although the Company believes its tax estimates are reasonable, the Company can make no assurance that the final tax outcome of these matters will not be different from that which it has reflected in its historical income tax provisions and accruals. Such differences could have a material impact on the Company’s income tax provision and operating results in the period in which the Company makes such determination.
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