INCOME TAXES

14 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 7: INCOME TAXES

We file a consolidated federal income tax return in the U.S. with the IRS and file tax returns in various state, local, and foreign jurisdictions. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. On July 14, 2021 we filed a U.S. federal income tax 1139 carryback claim to utilize net operating losses against income earned in tax years 2015 and 2016. Filing this carryback claim has opened our 2015 and 2016 tax years to examination. Consequently our U.S. federal income tax returns for 2015 and later years remaining open for examination. Our U.S. federal income tax returns for 2014 and all prior periods are currently closed. With respect to state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.

Our effective tax rate for continuing operations was 24.7% and (23.3)% for the two months ended June 30, 2021 and 2020, respectively. The increase in the effective tax rate is primarily due to the near break-even pretax loss in the period ending June 30, 2020 of $7.4 million, which caused an exaggerated impact for nearly all adjustments impacting the rate. Due to the change in fiscal year end, the income tax provision for the two months ended June 30, 2021 and 2020 were calculated using actual tax rates for the period.

We had gross unrecognized tax benefits of $264.3 million and $264.8 million as of June 30, 2021 and April 30, 2021, respectively. The gross unrecognized tax benefits decreased $0.5 million during the two months ended June 30, 2021. We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $68.3 million within the next twelve months. The anticipated decrease is due to the expiration of statutes of limitations and anticipated closure of various state matters currently under examination. For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.