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Income Taxes
3 Months Ended
Mar. 31, 2020
Income Taxes [Abstract]  
Income Taxes Note 15. Income Taxes

As required by ASC 740, “Income Taxes,” we compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from continuing operations before income taxes, except for significant unusual or infrequently occurring items. Our estimated tax rate is adjusted each quarter in accordance with ASC 740.

The effective tax rate on income from continuing operations was 227.3 percent and 5.5 percent for the three months ended March 31, 2020 and 2019, respectively. The effective tax rates on income from continuing operations for the three months ended March 31, 2020 and 2019, were primarily affected by the classification of ServiceMaster Brands Divestiture Group as held for sale. The effective tax rate on loss from continuing operations for the three months ended March 31, 2020 was also favorably impacted by the release of a federal reserve that was recorded discretely in the quarter. The effective tax rate on income from continuing operations for the three months ended March 31, 2019 was affected by the disposition of the Frontdoor retained shares in a non-taxable debt-for-equity exchange pursuant to the private letter ruling from the IRS that was recorded discretely.

As of March 31, 2020 and December 31, 2019, we had $13 million and $14 million, respectively, of tax benefits primarily reflected in US Federal and state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). Based on information currently available, it is reasonably possible that over the next 12 month period unrecognized tax benefits may decrease by $2 million as the result of settlements of ongoing audits, statute of limitation expirations or final settlements of uncertain tax positions in multiple jurisdictions. Our policy is to recognize interest income, interest expense and penalties related to our tax positions within the tax provision.