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Income Taxes
6 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was enacted by the U.S. government. The Tax Act has impacted the U.S. statutory Federal tax rate that the Company will use going forward, which has been reduced to 21% from 35%. The Tax Act also introduced a modified territorial tax system and a minimum tax on certain foreign earnings for tax years beginning after December 31, 2017.
In December 2017, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income Taxes, (“ASC 740”). The Company has completed its analysis within fiscal 2019 consistent with the guidance provided in SAB 118, and any adjustments during this measurement period have been included in the Consolidated Statements of Operations and Comprehensive Income as an adjustment to income tax provision.
The Company recorded an income tax provision of $4,483 and $1,335 on income from operations before income taxes of $16,866 and $10,468 for the three months ended December 31, 2018 and 2017, respectively. The Company recorded an income tax provision of $7,612 and an income tax benefit of $7,046 on income from operations before income taxes of $27,474 and $20,040 for the six months ended December 31, 2018 and 2017, respectively.
During the three months ended December 31, 2018 and 2017, the Company recognized a discrete tax benefit and expense of $67 and $294, respectively, related to excess tax benefits on stock-based compensation. The discrete tax expense for the three months ended December 31, 2017 included the enactment of the Tax Act which revalued the excess tax benefit previously recorded in the three months ended September 30, 2017. The effective tax rate for the three months ended December 31, 2018 and 2017 differed from the Federal statutory rate primarily due to Federal research and development credits, excess tax benefits related to stock compensation, a modified territorial tax system and a minimum tax on certain foreign earnings, and state taxes.
During the six months ended December 31, 2018 and 2017, the Company recognized a discrete tax benefit of $1,716 and $7,579, respectively, related to excess tax benefits on stock-based compensation. The effective tax rate for the six months ended December 31, 2018 and 2017 differed from the Federal statutory rate primarily due to Federal research and development credits, excess tax benefits related to stock compensation, a modified territorial tax system and a minimum tax on certain foreign earnings, and state taxes.
On August 21, 2018, the Internal Revenue Service ("IRS") provided initial guidance on amendments made to the limitation on executive compensation by the Tax Act. During the three months ended September 30, 2018, the Company recorded an adjustment to its unrecognized tax positions of $1,711 as a result of this guidance. During the three months ended December 31, 2018, there were no changes made to the Company’s unrecognized tax positions.