Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The effective tax rates for the three months ended September 30, 2019 and 2018 were 20.1% and 18.5%, respectively. The increase in the effective tax rate for the three months ended September 30, 2019 relative to the prior comparable period was principally due to a higher benefit from the impact of discrete tax items in the prior period.

The effective tax rates for the nine months ended September 30, 2019 and 2018 were 21.1% and 19.6%, respectively. The increase in the effective tax rate for the nine months ended September 30, 2019 relative to the prior comparable period is primarily driven by the exclusion of capital losses on the sale of Finder under local tax law partially offset by the impact of changes in tax law and the impact of other discrete tax items.

The discrete items for the three months ended September 30, 2019 primarily resulted from the net tax benefit from stock exercises and favorable audit settlements. The discrete items for the three months ended September 30, 2018 were driven by the net tax benefit from stock exercises. The discrete items for the nine months ended September 30, 2019 primarily resulted from the benefit of stock exercises and favorable audit settlements partially offset by the exclusion of capital losses on the sale of Finder under local tax law. The discrete items for the nine months ended September 30, 2018 primarily resulted from the benefit of stock exercises and favorable audit settlements.

Dover and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions. We believe adequate provision has been made for all income tax uncertainties. The Company is routinely audited by taxing authorities in its filing jurisdictions, and a number of these audits are currently underway. The Company believes that within the next twelve months uncertain tax positions may be resolved and statutes of limitations will expire, which could result in a decrease in the gross amount of unrecognized tax benefits of approximately zero to $11.5 million.