Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 11. Income Taxes

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Income before income taxes	$	111.6		$	118.1		$	226.0		$	240.4
Income tax (benefit) provision	$	(33.8)		$	18.8		$	(1.0)		$	63.8
Effective tax rate	(30.3)		%	15.9		%	(0.4)		%	26.5		%

The Company’s effective tax rate differs from the federal statutory rate of 21% primarily due to the tax impact of state taxes, geographic mix of earnings including foreign-derived intangible income deductions and global intangible low-taxed income, research and development ("R&D") tax credits, tax audit settlements, nondeductible compensation, cost sharing of stock-based compensation, and other transfer pricing adjustments.

In the third quarter of 2020, the Company received final orders from the U.S. and India Competent Authorities, which resolved the Company’s dispute with the India Tax Authorities for the 2010 through 2012 income tax years. The Company also remeasured certain previously unrecognized tax benefits for all open years resulting in a total release of $54.5 million, including $18.4 million of interest and penalties.

The Company’s effective tax rate for the nine months ended September 30, 2020 reflects the cumulative recognition of previously unrecognized tax benefits for transfer pricing of $54.5 million referenced above.

On June 7, 2019, the Ninth Circuit Court of Appeals issued an opinion in Altera Corp. v. Commissioner requiring related parties in an intercompany cost-sharing arrangement to share expenses related to stock-based compensation. On February 10, 2020, Altera appealed this decision to the U.S. Supreme Court, which on June 22, 2020, declined to review the decision. Based on the Supreme Court decision to not review the Ninth Circuit Court’s decision, stock-based compensation is subject to cost sharing, and the Company recorded a $18.2 million charge.

The Company's effective tax rate for the nine months ended September 30, 2019 reflected the recognition of previously unrecognized tax benefits, due to a lapse in statutes of limitation.

As of September 30, 2020, the total amount of gross unrecognized tax benefits was $112.2 million.

The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. There is a greater than remote likelihood that the balance of the gross unrecognized tax benefits will decrease by up to $11.6 million within the next twelve months due to the completion of tax review cycles in various tax jurisdictions and lapses of applicable statutes of limitation.