Income Taxes

9 Months Ended

Sep. 30, 2019

The following table sets forth information about the Company’s income tax (benefit) provision for the periods indicated (dollar amounts in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
(Loss) before income taxes	$	(18,587	)	$	(88,539	)	$	(209,465	)	$	(228,822	)
Income tax (benefit)	(66,257		)	(18,399		)	(63,355		)	(41,951		)
Net income/(loss)	$	47,670		$	(70,140	)	$	(146,110	)	$	(186,871	)

Income tax (benefit) as a percentage of (loss) before income taxes	NM - Not Meaningful			20.8		%	30.2		%	18.3		%

During the three month periods ended September 30, 2019 and 2018, the Company recorded income tax benefit of $66.3 million and $18.4 million, respectively, on (loss) before income taxes. The reason for the overall tax benefit during the three month period ended September 30, 2019, was due to the release of a reserve for an uncertain tax position as a result of the IRS acceptance of a method change and a release of tax liability due to expiring federal and state statutes of limitation. During the nine month period ended September 30, 2019, the Company recorded an income tax benefit of $63.4 million on (loss) before income taxes of $209.5 million, which principally relates to the release of a reserve for an uncertain tax position as a result of the IRS acceptance of a method change, including related penalties and interest and a release of tax liability due to expiring federal and state statutes of limitation. During the nine month period ended September 30, 2018, the Company recorded an income tax benefit of $42.0 million on (loss) before income taxes of $228.8 million. The Company did not use the discrete method to calculate the quarterly provision due to the company’s overall valuation allowance position.

The Company records a valuation allowance to reduce net deferred income tax assets to the amount that is more likely than not to be realized. In performing its analysis of whether a valuation allowance to reduce the deferred income tax asset was necessary, the Company evaluated the data and believes that it is not more likely than not that the deferred tax assets in the U.S., India, and Switzerland will be realized. Accordingly, the Company has recorded a full valuation allowance against U.S., India, and Switzerland deferred tax assets. The Company has a valuation allowance of $93.6 million against its deferred tax assets as of September 30, 2019.

In accordance with ASC 740-10-25, Income Taxes - Recognition, the Company reviews its tax positions to determine whether it is “more likely than not” that its tax positions will be sustained upon examination, and if any tax positions are deemed to fall short of that standard, the Company establishes reserves based on the financial exposure and the likelihood that its tax positions would not be sustained. Based on its evaluations, the Company determined that it would not recognize tax benefits on $2.1 million related to uncertain tax positions as of September 30, 2019. If recognized, $2.1 million of the above positions would impact the Company’s effective rate. The Company accounts for interest and penalties related to uncertain tax positions as income tax expense. During the nine month period ended September 30, 2019, the Company recorded no penalties and $0.1 million of interest related to unrecognized tax liabilities. As of September 30, 2019, the Company had accrued no penalties and a total of $0.2 million of interest.