Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

The Company’s effective tax rates for the Successor three and nine months ended September 30, 2022 and the three months ended September 30, 2021, and the Predecessor six months ended June 30, 2021 were 31%, 82%, 0% and 16%, respectively.
 

The changes in the effective tax rates were primarily driven by the Business Combination as the Predecessor and certain of its subsidiaries operated in the U.S. as partnerships for income tax purposes and generally as corporate entities in non-U.S. jurisdictions. The Predecessor effective tax rate for the applicable period was substantially lower due to certain non-recurring items included in pre-tax and tax expense during the Successor periods.

The effective tax rates for the Successor three and nine months ended September 30, 2022 were higher than the 21% U.S. statutory corporate income tax rate. This difference is primarily due to the recognition of a benefit for an uncertain tax position for which the statute of limitations has lapsed, and partially offset by losses in certain non-U.S. jurisdictions for which tax benefits have not been recorded.

The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate ("AETR") for the full fiscal year to ordinary income or loss for the reporting period. During the three months ended September 30, 2022, the Company determined that the historical method could not be used as the AETR became highly sensitive due to the amount of aggregate projected tax in relation to the projected ordinary income. The unusual circumstance which increases the aggregate projected tax relates to the relative mix of pretax income and loss in relation to the income tax expense or benefit that may be required or allowed in our various global jurisdictions. Accordingly, the Company calculated the provision for income taxes using the actual effective tax rate for the three months and nine months ended September 30, 2022.