Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For interim periods, we recognize an income tax provision (benefit) based on our estimated annual effective tax rate expected for the full year.

An income tax expense (benefit) of $0.3 million and $(0.5) million was recognized for the three months ended March 31, 2020 and 2019 respectively, which resulted in effective tax rates of (0.3)% and 1.0%, respectively. The Company and its U.S. subsidiaries continue to record a valuation allowance against its net deferred tax assets, with the exception of indefinite lived components. The income tax expense recorded during the three months ended March 31, 2020 primarily relates to foreign taxes as well as an increase to those indefinite components from the tax amortization of goodwill.

As of December 31, 2019, the Company had unrecognized tax benefits of $0.8 million that, if recognized, would not affect the effective tax rate. As of March 31, 2020, there are no changes to the unrecognized tax benefits. The Company is not currently subject to income tax audits in any U.S., state, or foreign jurisdictions for any tax year.

Tax Receivables Agreement

In connection with the Offering Reorganization, the Company entered into the TRA with certain of its investors, which provides for the payment by the Company to these investors of 85% of the amount of the tax benefits, if any, that the Company is deemed to realize as a result of increases in our tax basis related to exchanges of Class B common units as well as tax benefits attributable to the future utilization of pre-IPO NOLs. See Note 10 above and “Part II - Item 8. Financial Statements and Supplementary Data - Note 13” in our 2019 Form 10-K for discussion of our TRA.