Income Taxes

The following table provides details of income taxes (in millions, except percentages):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Income before income taxes	$	152.0		$	225.8		$	344.3		$	611.6
Income tax (benefit) provision	$	(71.8	)	$	60.1		$	(30.4	)	$	157.3
Effective tax (benefit) rate	(47.2		)%	26.6		%	(8.8		)%	25.7		%

The Company's effective tax rate during the three and nine months ended September 30, 2018 differs from the federal statutory rate of 21%, primarily due to the recognition of certain previously unrecognized tax benefits of $67.6 million, which includes interest of $8.4 million, a reduction of expected tax liabilities of $33.2 million, federal research and development credits and a favorable change in the forecasted geographic mix of earnings. The recognition of $67.6 million in previously unrecognized tax benefits is due to a lapse in the federal statute of limitations relative to fiscal years 2010 through 2014. The reduction of expected tax liabilities of $33.2 million is a result of filing a change in accounting method for the tax recognition of deferred product revenue in the U.S. to better align with the financial statement recognition of such revenue.

The Tax Act enacted on December 22, 2017 introduced significant changes to U.S. income tax law. Effective January 1, 2018, the Tax Act reduced the U.S. federal corporate income tax rate from 35% to 21% and created a minimum tax on foreign earnings.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in the financial statements as of December 31, 2017. While the Company believes it has largely completed its analysis and related impacts of the Tax Act, the Company expects further guidance from revenue and taxation authorities in the fourth quarter of 2018, particularly from state authorities, which may impact the tax effects. As a result, the Company may make adjustments to the provisional amounts which may materially impact its provision for income taxes from continuing operations in the period in which the adjustments are made. The Company will complete the accounting for the tax effects of the Tax Act in the fourth quarter of 2018.

The Tax Act also includes provisions to tax Global Intangible Low-Taxed Income (“GILTI”) of foreign subsidiaries in excess of a deemed return on their tangible assets. The Company anticipates further guidance in the form of tax regulations to be issued by the U.S. Treasury in the fourth quarter of 2018, regarding the utilization of foreign tax credits relative to GILTI. Due to the complexities of the new provisions and the anticipated regulations referenced above, the Company is continuing to evaluate how the provisions will be accounted for under U.S. GAAP. Pursuant to the Tax Act, corporations are allowed to make an accounting policy election to either (i) account for GILTI as a component of income tax expense in the period in which the corporation is subject to the rules (the “period cost method”), or (ii) account for GILTI in the corporation's measurement of deferred taxes (the “deferred method”). The Company has not currently elected a method and will do so after completing its analysis of the GILTI provisions of the Tax Act depending on the analysis of the Company’s global income. Therefore, the Company has not recorded any potential deferred tax effects related to GILTI in its financial statements and has not yet made an accounting policy election regarding whether to record deferred taxes on GILTI or use the period cost method. The Company has, however, included an estimate of the current GILTI impact in its annual effective tax rate for 2018. The Company expects to complete the accounting during the measurement period.

As of September 30, 2018, the total amount of gross unrecognized tax benefits was $205.0 million, of which $183.3 million, if recognized, would affect the effective tax rate.

The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that the balance of unrecognized tax benefits could decrease up to $7.9 million within the next twelve months due to lapses of applicable statutes of limitations and the completion of tax review cycles in various tax jurisdictions.