Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate was 22% and 32% for the nine months ended September 30, 2019 and 2018, respectively. In 2018, the Company decided to elect to treat its two most significant United Kingdom subsidiaries as domestic corporations for U.S. tax purposes. As a result, the earnings and profits of those subsidiaries are no longer considered to be indefinitely reinvested, and during the nine months ended September 30, 2018, the Company recorded a one-time deferred tax charge of $102.0 million related to the book and tax basis differences attributable to those subsidiaries. This tax charge represented 11% of the 2018 effective tax rate.

The Company uses the estimated annual effective tax rate method for calculating its tax provision in interim periods. This method applies the Company's best estimate of the effective tax rate expected for the full year to year-to-date earnings before income taxes. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated (discrete items), such as the deferred tax charge described above, are excluded from the estimated annual effective tax rate and the related tax expense or benefit is reported in the same period as the related item. The Company's estimated annual effective tax rate was 21% and 20% for the nine months ended September 30, 2019 and 2018, respectively.

The Internal Revenue Service is currently examining the Company’s 2017 federal income tax return. The Company believes its income tax liabilities were adequate as of September 30, 2019, however, these liabilities could be adjusted as a result of this examination.