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Income Taxes
6 Months Ended
Jun. 30, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The Company calculates an effective income tax rate each quarter using the estimated annual effective rate method based upon forecasted annual income by jurisdiction, statutory tax rates and other tax-related items. The impact of discrete items is recognized in the interim period in which they occur. Discrete items and the mix of domestic and foreign pre-tax income and losses with no tax benefit may significantly impact the interim period income tax provision and increase the volatility of the interim period effective tax rate at low levels of pre-tax results.

A valuation allowance has been recorded to reduce deferred tax assets to the amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts. In the fourth quarter of 2015 the company booked a valuation allowance against federal deferred tax assets due to cumulative losses.
The effective tax rates for the six months ended June 30, 2016 and 2015 were (13.0)% and 89.8%, respectively. The effective tax rate for the six months ended June 30, 2016 is a negative rate due to taxes on profits in Canada and taxes imposed in certain U.S. states, while tax benefits from losses in the United Kingdom and United States are not recognizable due to valuation allowances. The effective tax rate for the six months ended June 30, 2015 was 89.8% due to a mix of the tax effects of stock based compensation, foreign losses not benefited and expenses that were not deductible for tax.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets, including net operating loss carryforwards. Management’s assessment is made for each taxpayer on a jurisdiction by jurisdiction basis. A full valuation allowance has been recorded against the deferred tax asset related to part of the group’s U.S. state taxes and federal taxes as these are more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased or decreased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.