Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2018 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Income Taxes
For the three months ended June 30, 2018 and 2017, the Company’s provision for income taxes, as a percentage of income before income taxes was 116.4 percent and 190.5 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent and 35.0 percent. For the six months ended June 30, 2018 and 2017, the Company’s provision for income taxes, as a percentage of income before income taxes was 86.5 percent and 61.9 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent and 35.0 percent.
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and six months ended June 30, 2018, was primarily attributed to current year foreign losses, largely related to China, that presently do not provide future tax benefit, as well as net unfavorable foreign tax related items.
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and six months ended June 30, 2017, was primarily attributed to current year foreign losses, largely related to China, that presently do not provide future tax benefit, partially offset by foreign tax credit benefits.
In December 2017, the Tax Cuts and Jobs Act (Tax Reform Act) was signed into law. The provisions of the Tax Reform Act and related guidance provided by Staff Accounting Bulletin No. 118 allow for adjustments throughout 2018 to account for the impacts of the 2017 tax law changes. As of June 30, 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, the Company is continuing to evaluate these provisions of the Tax Reform Act and the application of ASC 740. The Company is also continuing to gather additional information and expect to complete its accounting within one year of enactment.
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 2010 through 2017.
As of June 30, 2018, the Company had accrued $4.8 million related to unrecognized tax positions, compared with $4.6 million as of December 31, 2017. This net increase was primarily attributed to 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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