Income Taxes - Continuing Operations

9 Months Ended

Sep. 30, 2019

Income Taxes - Continuing Operations

Income Taxes - Continuing Operations

11. Income Taxes – Continuing Operations

During the three months ended September 30, 2019, the Company recognized an income tax expense of $2,515 on a pre-tax income of $1,859,  compared to an income tax benefit of $355  on a pre-tax loss of $1,440 for the prior year period. During the nine months ended September 30, 2019, the Company recognized an income tax expense of $3,695 on pre-tax income of $1,494, representing an effective income tax rate of 247.3%.  For the nine months ended September 30, 2018, the Company recognized an income tax benefit of $4,933 on a pre-tax loss of $12,497, representing an effective income tax rate of 39.5%.

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

	September 30,
	2019		2018
Tax at federal statutory rate	21.0	%	21.0	%
State Taxes, net	38.0		0.5
Valuation allowance	174.1		(2.5)
Tax benefit U.K. discontinued operation	—		27.7
Other	14.2		(7.2)
Effective income tax rate	247.3	%	39.5	%

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 $2,600 on certain U.S. deferred tax assets at an effective income tax rate impact of 174.1% for the nine months ended September 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 nine months ended September 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 September 30, 2019, is primarily comprised of a  $5,005 U.S. federal income tax receivable relating to a prior tax year.