10. Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Note 10. Income Taxes

The Company reported an income tax benefit of $5.6 million and a provision of $655,000 for the three months ended September 30, 2015 and 2014, respectively and a benefit of $13.8 million and $9.0 million for the nine months ended September 30, 2015 and 2014, respectively. The Company's effective tax rate was 17.2% for the nine months ended September 30, 2015, compared to an estimated annual effective rate of 22.8%. The difference between the estimated annual rate and the September 30, 2015 effective tax rate is primarily due to expenses recorded for financial reporting purposes that were treated as nondeductible and discrete for the three and nine months ended September 30, 2015.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Our deferred tax assets are comprised primarily of U.S. federal net operating losses and accruals. A substantial portion of the deferred tax liability at September 30, 2015 relates to the difference between the financial statement and tax basis of the intangibles acquired in the Cypress acquisition. The deferred tax liability related to these Cypress intangibles is reduced on an annual basis by the financial statement amortization of such intangibles.

Income tax returns subject to review by taxing authorities include 2010, 2011, 2012, 2013 and 2014.