Income taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income taxes

NOTE 10 — Income taxes

The following table outlines our pre-tax net income (loss) and income tax amounts:

	Three months ended						Nine months ended
In thousands	September 30, 2020			September 29, 2019			September 30, 2020			September 29, 2019
Pre-tax net income (loss)	$	(28,350	)	$	(11,742	)	$	(572,085	)	$	(20,779	)
Income tax expense (benefit)	3,098			7,226			(22,200		)	4,929
Effective tax rate	***			***			3.9		%	***

*** Indicates a percentage that is not meaningful.

For the three months ended September 30, 2020 and September 29, 2019 our effective income tax rate on Pre-tax net loss was not meaningful. For the nine months ended September 30, 2020, our effective income tax rate on Pre-tax net loss was 3.9% and was not meaningful for the nine months ended September 29, 2019.

The provision for income taxes for the three months ended September 30, 2020 was mainly impacted by a reduction in the year to date tax benefit as a result of a lower projected annualized effective tax rate. The provision for income taxes for the three months ended September 30, 2020 was calculated using the estimated annual effective tax rate of 6.2%. The estimated annual effective tax rate is based on a projected tax benefit for the full year. The tax benefit for the nine months ended September 30, 2020 is lower than the 21% statutory Federal rate due to the impact of non-deductible asset impairments, non-deductible officers’ compensation and the creation of valuation allowances on non-deductible interest expense carryforwards and capital losses.

The CARES Act was enacted on March 27, 2020. The Company will realize a tax benefit attributable to the legislation which permits a refund of tax benefits from earlier years. The legislation also allows the Company to defer certain employer payroll tax payments in 2020 to the end of 2021 and 2022. In addition, the Company is pursuing Employee Retention Tax Credits as provided under the CARES Act. The Company continually monitors guidance from the U.S. Department of the Treasury (the "Treasury") and the Internal Revenue Service to determine whether additional tax benefits are available from this legislation and similar stimulus efforts.

The Tax Cuts and Jobs Act of 2017 (“TCJA”) revised business interest expense limitations under I.R.C. Section 163(j) such that business interest deductions are not allowed in amounts exceeding prescribed percentages of EBITDA for tax years beginning before January 1, 2022. For tax years beginning after January 1, 2022, deductible interest cannot exceed prescribed percentages of EBIT. Unused business interest deductions are carried forward and recorded as deferred tax assets. The Company has evaluated the potential utilization of such carryforward deferred tax assets and determined full valuation allowances are appropriate as future utilization is uncertain.

The total amount of unrecognized tax benefits that, if recognized, may impact the effective tax rate was approximately $32.9 million as of September 30, 2020 and $32.4 million as of December 31, 2019. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $2.5 million as of September 30, 2020 and $1.9 million as of December 31, 2019.

It is reasonably possible that further adjustments to our unrecognized tax benefits may be made within the next twelve months due to audit settlements and regulatory interpretations of existing tax laws. At this time, an estimate of potential change to the amount of unrecognized tax benefits cannot be made.