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Income Taxes
9 Months Ended
Sep. 30, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for the years in which taxes are expected to be paid or recovered.
For the three months ended September 30, 2015, the Company recorded a provision for taxes of $2.2 million. For the three months ended September 30, 2014, the Company recorded a tax benefit of $0.6 million due to the loss before taxes. The effective tax rate for the three months ended September 30, 2015 and 2014 differs from the 35% statutory tax rate, primarily due to the tax benefit of production activities and return to provision adjustments, partially offset by state income taxes.
For the nine months ended September 30, 2015, the Company recorded a provision for taxes of $5.3 million. The effective tax rate for the nine months ended September 30, 2015 differs from the 35% statutory tax rate due to the tax benefit of production activities and return to provision adjustments, partially offset by state income taxes. The effective tax rate for the nine months ended September 30, 2014 differs from the 35% statutory tax rate due to the recognition of a tax benefit for the cumulative net deferred tax assets resulting from our conversion to a taxable entity. For the nine months ended September 30, 2014, the Company recorded a tax benefit of $2.6 million primarily due to the differences between the financial statement basis and tax basis of certain assets upon conversion to a taxable entity at the time of our initial public offering, resulting in a net deferred tax asset. Additionally, the effective tax rate was reduced by the exclusion of pre-conversion earnings from taxable income for the three months ended March 31, 2014, and the tax benefit of production activities, partially offset by state income taxes.
As discussed in Note 1, for the first 30 calendar days of 2014, the Company was a Delaware LLC which was treated as partnership for income tax purposes and was subject to certain minimal taxes and fees; however, income taxes on taxable income or losses realized by the Company were the obligation of the members.
Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely or not unrealizable under ASC 740. We are required to establish a valuation allowance for any portion of the asset we conclude is more likely or not unrealizable. Our assessment considers, among other things, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, the duration of statutory carryforward periods, our utilization experience with operating loss and tax credit carryforwards and the planning alternatives, to the extent these items are applicable.
The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense. The Company has concluded that there were no significant uncertain tax positions requiring recognition in its financial statements, nor has the Company been assessed interest or penalties by any major tax jurisdictions related to any open tax periods.