Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act is an approximately $2 trillion emergency economic stimulus package in response to the COVID-19 outbreak, which among other items, includes income tax provisions relating to net operating loss carryback periods and technical corrections to tax depreciation methods for qualified improvement property. As a result of the enactment of this legislation during the first quarter of 2020, we recorded a tax benefit of $0.8 million related to the remeasurement of a portion of our income tax receivable due to the ability to apply the federal net operating loss incurred in 2018 to prior year income for a refund at a higher tax rate in the carryback period.

We apply an estimated annual effective tax rate to our year-to-date operating results to determine the interim provision for income tax expense. In addition, we recognize taxes related to unusual or infrequent items or resulting from a change in judgment regarding a position taken in a prior year as discrete items in the interim period in which the event occurs.

For the three months ended June 30, 2020, our effective tax rate was 20.1% as we recognized income tax expense from continuing operations of $3.4 million on income from continuing operations of $17.0 million. The effective tax rate of 20.1% was more favorable than the statutory rate, inclusive of state income taxes, of 26.0%, primarily due to the current year-to-date pre-tax losses and the impact during the quarter of certain nondeductible expense items, including the nondeductible portion of the goodwill impairment charges, based on the attribution of those expenses to the quarter in accordance with the allocation of income tax expense on a current year-to-date basis. The effective tax rate also reflected the positive impact of certain federal tax credits.

For the three months ended June 30, 2019, our effective tax rate was 24.8% as we recognized income tax expense from continuing operations of $3.5 million on income from continuing operations of $14.0 million. The effective tax rate of 24.8% was more favorable than the statutory rate, inclusive of state income taxes, of 26.4%, primarily due to non-taxable gains on our investments used to fund our deferred compensation liability and federal tax credits, partially offset by non-deductible business expenses.

For the six months ended June 30, 2020, our effective tax rate was 21.4% as we recognized an income tax benefit from continuing operations of $7.8 million on a loss from continuing operations of $36.5 million. The effective tax rate of 21.4% was less favorable than the statutory rate, inclusive of state income taxes, of 26.0%, primarily due to certain nondeductible expense items and the nondeductible portion of the goodwill impairment charges recorded during the first quarter of 2020. These unfavorable items were partially offset by a discrete tax benefit for share-based compensation awards that vested during the first quarter and the discrete tax benefit for the remeasurement of a portion of our income tax receivable as a result of the enactment of the CARES Act in the first quarter of 2020.

For the six months ended June 30, 2019, our effective tax rate was 25.8% as we recognized income tax expense from continuing operations of $4.8 million on income from continuing operations of $18.8 million. The effective tax rate of 25.8% was more favorable than the statutory rate, inclusive of state income taxes, of 26.4%, primarily due to non-taxable gains on our investments used to fund our deferred compensation liability, federal tax credits and share-based compensation awards that vested during the year; partially offset by non-deductible business expenses.