(5) INCOME TAXES

Income tax benefit was as follows (in thousands):

		Three Months Ended September 30,						Nine Months Ended September 30,
		2016			2015			2016			2015
Income tax benefit	$	(13,705	)	$	(134,781	)	$	(187,231	)	$	(174,390	)
Effective tax rate		24.6	%		30.9	%		34.3	%		30.8	%

We compute our quarterly taxes under the effective tax rate method based on applying an anticipated annual effective rate to our year-to-date income, except for discrete items. Income taxes for discrete items are computed and recorded in the period that the specific transaction occurs. For third quarter and the nine months ended September 30, 2016 and 2015, our overall effective tax rate was different than the federal statutory rate of 35% due primarily to state income taxes, valuation allowances and other permanent differences. The three months ended September 30, 2016 includes $5.3 million income tax expense related to Memorial Merger transaction costs that are not deductible for tax purposes. The three months ended September 30, 2016 also includes $2.8 million and the nine months ended September 30, 2016 includes $10.5 million of tax expense related to an increase in our valuation allowance for state net operating loss carryforwards that we do not believe are realizable. The three months ended September 30, 2016 includes an income tax benefit of $682,000 and the nine months ended September 30, 2016 includes an income tax expense of $1.8 million to adjust the valuation allowance on our deferred tax asset related to future deferred compensation plan distributions of our senior executives. In addition, for the nine months ended September 30, 2016, we recorded income tax expense of $3.7 million related to equity compensation because our compensation expense recorded for financial reporting exceeded our corresponding income tax deduction.

The three months ended September 30, 2015 includes income tax expense of $8.5 million and the nine months ended September 30, 2015 includes income tax expense of $19.8 million related to increases in our valuation allowances for state net operating loss carryforwards and credit carryforwards. The three months ended September 30, 2015 also includes income tax benefit of $2.6 million and the nine months ended September 30, 2015 includes income tax benefit of $3.5 million adjusting our valuation allowance for our deferred tax asset related to future deferred compensation plan distributions of our senior executives.