(16) Income Taxes

The Company’s income tax expense based on income before income taxes for the periods presented was as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
	(In thousands, excluding percentages)
Income tax expense (benefit)	$	7,854		$	(4,053)		$	10,409		$	(2,335)
Effective tax rate		47.2	%		2.3	%		51.6	%		1.4	%

The Company’s income tax expense for the three months ended September 30, 2018 totaled $7.9 million, resulting in an effective tax rate of 47.2%, compared to a benefit of $4.1 million, and an effective tax rate of 2.3%, for the same period of 2017. The Company’s income tax expense for the nine months ended September 30, 2018 totaled $10.4 million, or an effective tax rate of 51.6%, compared to a benefit of $2.3 million, or an effective tax rate of 1.4%, for the same period of 2017. The increase in the effective tax rate for the three and nine months ended September 30, 2018, compared to the same periods of 2017, was primarily attributable to (i) the limitation of interest expense the Company could deduct in the U.S. as a result of U.S. Tax Reform, (ii) the additional tax expense related to share-based compensation in 2018, compared to an excess tax benefit in the same period of 2017, (iii) and the goodwill impairment recognized during the three and nine months ended September 30, 2017, resulting in a loss in earnings that was not deductible.

As of September 30, 2018, the Company had not completed its accounting for the tax effects of the U.S. Tax Reform, due to additional guidance anticipated from standard-setting bodies and the need to obtain additional information to complete calculations. During the three months ended December 31, 2017, the Company provisionally recognized an estimated one-time tax expense of $7.8 million on its accumulated undistributed foreign earnings and during the three months ended September 30, 2018, the Company decreased its estimate of the one-time tax by $1.2 million upon its completion of the earnings and profits calculations of its foreign subsidiaries. Offsetting this benefit, the Company recognized a charge of $1.0 million for deferred tax assets that will not be realized, determined after the release of IRS Notice 2018-68, clarifying deduction limitations for remunerations of covered persons. As a result, the Company realized a net benefit of $0.2 million in this period. The Company expects to complete its accounting for income tax effects of the U.S. Tax Reform in the three months ending December 31, 2018.

The Company assesses the need for any deferred tax asset valuation allowances at the end of each reporting period. The determination of whether a valuation allowance for deferred tax assets is needed is subject to considerable judgment and requires an evaluation of all available positive and negative evidence. The Company’s assessment concluded that maintaining valuation allowances on deferred tax assets in Australia, Mexico, and Spain was appropriate, as the Company currently believes that it is more likely than not that the related deferred tax assets will not be realized.

The deferred tax expenses and benefits associated with the Company’s net unrealized gains and losses on derivative instruments and foreign currency translation adjustments have been recorded in the Accumulated other comprehensive loss, net line in the accompanying Consolidated Balance Sheets.