Income Taxes

6 Months Ended

Apr. 30, 2020

Income Taxes [Abstract]

Income Taxes

15. Income Taxes

The provision for income taxes was $22.0 million and $37.1 million, or 45.3 percent and 25.1 percent of pre-tax income, for the three months ended April 30, 2020 and 2019, respectively. The provision for income taxes was $54.6 million and $64.7 million, or 28.5 percent and 24.4 percent of pre-tax income, for the six months ended April 30, 2020 and 2019, respectively.

The following table reconciles the U.S. statutory federal income tax rate to the Company’s effective income tax rate:

	Three Months Ended				Six Months Ended
	April 30,				April 30,
	2020		2019		2020		2019
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
State income tax, net of federal income
tax benefits	8.8		4.5		5.9		4.5
Net (income) loss attributable to non-controlling
and other beneficial interests	16.7		(0.9)		3.9		(0.9)
Stock-based and other compensation	1.5		-		0.7		-
Net excess tax benefits from stock-based
compensation plans	(2.2)		(0.2)		(3.1)		(1.2)
Other items	(0.5)		0.7		0.1		1.0
Effective income tax rate	45.3	%	25.1	%	28.5	%	24.4	%

The Company’s income tax provision for the three and six months ended April 30, 2020 includes charges of $0.9 million and $2.2 million, respectively, associated with certain provisions of the Tax Cuts and Jobs Act (2017 Tax Act) taking effect for the Company in fiscal 2019, relating principally to limitations on the deductibility of executive compensation. In the three and six months ended April 30, 2020, the Company’s income tax provision was reduced by net excess tax benefits of $1.1 million and $6.0 million, respectively, related to the exercise of employee stock options and vesting of restricted stock awards, and $9.9 million and $10.8 million, respectively, related to net income attributable to non-controlling and other beneficial interests, which is not taxable to the Company.

The Company’s income tax provision for the three months ended April 30, 2019 includes $0.7 million of charges associated with certain provisions of the 2017 Tax Act taking effect for the Company in fiscal 2019, relating principally to limitations on the deductibility of executive compensation. The Company’s income tax provision was reduced by net excess tax benefits related to the exercise of employee stock options and vesting of restricted stock awards totaling $0.3 million and $1.6 million related to the net income attributable to redeemable non-controlling interests, which is not taxable to the Company.

The Company’s income tax provision for the six months ended April 30, 2019 includes $1.3 million of charges associated with certain provisions of the 2017 Tax Act taking effect for the Company in fiscal 2019, relating principally to limitations on the deductibility of executive compensation. The increase in the effective tax rate resulting from this charge is offset by an income tax benefit of $3.2 million related to the exercise of employee stock options and vesting of restricted stock awards and $3.0 million related to the net income attributable to redeemable non-controlling interest and other beneficial interests, which is not taxable to the Company.

As of April 30, 2020 and October 31, 2019, no valuation allowance has been recorded for deferred tax assets, reflecting management’s belief that all deferred tax assets will be utilized.

As of April 30, 2020, the Company considers the undistributed earnings of certain foreign subsidiaries to be indefinitely reinvested in foreign operations. As of that date, the Company had approximately $10.7 million of undistributed earnings primarily from foreign operations in the U.K. that are not available to

fund domestic operations or to distribute to shareholders unless repatriated. In consideration of the treatment of taxable distributions under the 2017 Tax Act, the impact of Global Intangible Low Taxed Income on the Company’s future foreign earnings and lack of withholding tax imposed by certain foreign governments, any future tax liability with respect to these undistributed earnings is immaterial.

The Company is generally no longer subject to income tax examinations by U.S. federal, state, local or non-U.S. taxing authorities for fiscal years prior to fiscal 2016.