INCOME TAXES

The effective income tax rate of 34.2% for the third quarter of 2017 was slightly higher than the 2016 third quarter rate of 33.9%. The effective tax rates for the first nine months of 2017 and 2016 were 30.6% and 33.3%, respectively. These tax rates for both 2017 and 2016 generally benefited from the non-taxability of certain income items. The 2017 effective tax rate was further impacted by the following factors:


•	We re-evaluated our state tax positions in the first quarter of 2017, which resulted in a one-time $14 million benefit to income tax expense.


•	We reduced income tax expense by $4 million in the second quarter of 2017 due to changes in the carrying value of various state deferred tax items.


•	We also recorded an $8 million benefit in the first nine months of 2017 from the implementation of new accounting guidance related to stock-based compensation.

We had a net deferred tax asset (“DTA”) balance of $207 million at September 30, 2017, compared with $250 million at December 31, 2016, which included a $4 million valuation allowance at each respective reporting date for certain acquired net operating loss carryforwards included in our acquisition of the remaining interest in a less significant subsidiary. We evaluate deferred tax assets on a regular basis to determine whether an additional valuation allowance is required. Based on this evaluation, and considering the weight of the positive evidence compared to the negative evidence, we have concluded that an additional valuation allowance is not required as of September 30, 2017.