Income Taxes

6 Months Ended

Jun. 30, 2020

The following table presents details of the provision for (benefit of) income taxes and our effective tax rates (in thousands, except percentages):


	Three Months Ended June 30,									Six Months Ended June 30,
	2020			2019			2020			2019
Provision for (benefit of) income taxes	$	12,533		$	(7,320)		$	(3,864)		$	(17,793)
Effective tax rate	55.1		%	(69.5)		%	(7.1)		%	(117.9)		%

We account for income taxes according to ASC 740, which, among other things, requires that we estimate our annual effective income tax rate for the full year and apply it to pre-tax income (loss) for each interim period, taking into account year-to-date amounts and projected results for the full year. We periodically evaluate whether we will recover a portion or all of our deferred tax assets. We record a valuation allowance against our deferred tax assets if and to the extent it is more likely than not that we will not recover our deferred tax assets. In evaluating the need for a valuation allowance, we weight all relevant positive and negative evidence, including among other factors, historical financial performance, forecasts of income over the applicable carryforward periods, and our market environment, with each piece weighted based on its reliability. As of June 30, 2020, we had insufficient objective positive evidence that we will generate sufficient future pre-tax income to overcome the negative evidence of cumulative losses. Accordingly, we recorded a full valuation allowance against our U.S. deferred tax assets as of June 30, 2020. Upon establishing the U.S. valuation allowance, we revised our annual effective income tax rate for the year ended December 31, 2020 and recorded the cumulative effect of the revised estimated tax rate through provision for income taxes during the three months ended June 30, 2020. We continue to record a full valuation allowance against our U.K. deferred tax assets as of June 30, 2020. We had a deferred tax liability of $5.6 million as of December 31, 2019, included in other liabilities in our condensed consolidated balance sheets.

We account for the tax effects of discrete events in the interim period they occur. The provision for income taxes consists of federal, foreign, state, and local income taxes. Our effective tax rate differs from the statutory U.S. income tax rate due to the effect of state and local income taxes, differing tax rates imposed on income earned in foreign jurisdictions and in the United States, losses in foreign jurisdictions, certain nondeductible expenses, excess tax deductions, and the changes in valuation allowances against our deferred tax assets. Our effective tax rate could change significantly from quarter to quarter because of recurring and nonrecurring factors. The benefit of income taxes for the six months ended June 30, 2020 and 2019 was primarily attributable to discrete tax benefits related to excess tax deductions from settled stock options and RSUs. This was offset by the impact of establishing a valuation allowance against our U.S. deferred tax assets as of June 30,2020.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, or the CARES Act, was signed into law. The CARES Act includes tax provisions applicable to businesses, such as net operating losses, enhanced interest deductibility, optional deferral of deposits of payroll taxes and a refundable employee retention payroll tax credit. We have determined that these provisions did not have an impact to our condensed consolidated financial statements for the six months ended June 30, 2020.

Neither we nor any of our subsidiaries are currently under examination from tax authorities in the jurisdictions in which we do business.