Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Historically, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period. Because small fluctuations in estimated ordinary income could result in significant changes in the estimated annual effective tax rate, the Company determined that the historic method does not provide a reliable estimate for the nine months ended September 30, 2019. As a result, the Company instead used a discrete effective tax rate method to calculate taxes for the nine months ended September 30, 2019. There were no material changes to the Company's methodology for determining unrecognized tax benefits during the nine months ended September 30, 2019.

For the nine months ended September 30, 2018, the Company calculated the provision for income taxes by applying the annual effective tax rate for the full fiscal year to ordinary income or loss for the period.

The Company recorded income tax benefit at effective tax rates of 17.1% and 25.1% for the nine months ended September 30, 2019 and 2018, respectively. The Company's effective tax rate for the nine months ended September 30, 2019 was lower compared to the U.S. federal statutory rate of 21% due primarily to state valuation allowances that limit certain state tax benefits and executive compensation and transaction costs, which are not deductible for tax purposes, partly offset by state taxes recorded in 2019 and the release of the valuation allowance related to Alternative Minimum Tax (AMT) sequestration. The IRS announced in January 2019 that it was reversing its prior position that 6.2% of AMT refunds were subject to sequestration by the U.S. federal government. As a result, the Company reversed this related valuation allowance in the first quarter of 2019. The Company's effective tax rate for the nine months ended September 30, 2018 was higher than the U.S. federal statutory rate due primarily to higher state taxes recorded in 2018, partly offset by valuation allowances that limit state tax benefits.