Income Taxes - Continuing Operations

6 Months Ended

Jun. 30, 2019

Income Taxes - Continuing Operations

11. Income Taxes – Continuing Operations

During the three months ended June, 2019, the Company recognized an income tax expense of $777 on a pre-tax income of $2,329 compared to an income tax benefit of $2,593 on a pre-tax loss of $3,395 for the prior period. During the six months ended June 30, 2019, the Company recognized an income tax expense of $1,180 on pre-tax loss of $365, representing an effective income tax rate of (323.3%). For the six months ended June 30, 2018, the Company recognized an income tax benefit of $4,578 on a pre-tax loss of $11,058, representing an effective income tax rate of 41.4%.

For the six months ended June 30, 2019 and 2018, the effective tax rate differs from the U.S. federal statutory income tax rate as follows:


	June 30,
	2019		2018
Tax at federal statutory rate	20.3	%	21.0	%
State Taxes, net	(60.1)		2.1
Valuation allowance	(206.2)		(8.3)
Tax benefit U.K. discontinued operation	—		27.2
Other	(77.3)		(0.6)
Effective income tax rate	(323.3)	%	41.4	%

The effective tax rate differs from the federal U.S. statutory rate primarily due to the impact of tax expense recorded related to a partial valuation allowance of $752 on certain U.S. deferred tax assets at an effective income tax rate impact of (206.2%) for the six months ended June 30, 2019. The partial valuation allowance is due to the limitation on the deductibility of business interest expense which is a provision of U.S. government tax reform legislation enacted in December 2017. For the six months ended June 30, 2018, the primary reason that the effective tax rate differs from the federal U.S. statutory rate is due to a tax benefit recorded in connection with the U.K. Limited discontinued operation. The Company’s income tax receivable on the condensed consolidated balance sheet as of June 30, 2019, is primarily comprised of U.S. federal income tax receivable relating to a prior tax year.