XML 25 R13.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Taxes
6 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The effective income tax rate for income taxes as a percentage of income from continuing operations before equity in losses of affiliates and income taxes was 31.0% and 33.5% for the three months ended June 30, 2017 and 2016, respectively, and 31.2% and 34.7% for the six months ended June 30, 2017 and 2016, respectively.

For the three months ended June 30, 2017, when compared to 2016, the decrease in the effective income tax rate was primarily attributable to favorable tax benefits due to nonrecurring favorable adjustments related to prior year foreign deferred taxes, partially offset by nonrecurring prior year favorable release of reserves for foreign uncertain tax benefits.

For the six months ended June 30, 2017 when compared to 2016, the decrease in the effective tax rate was primarily attributable to favorable tax benefits related to the adoption of the stock based compensation accounting guidance and state tax benefit due to closure of the IRS exam for 2006-2009, partially offset by a nonrecurring prior year favorable release of reserves for foreign uncertain tax benefits.

Income taxes included in equity in losses of affiliates were a benefit of $0.2 million and expense of $0.3 million for the three months ended June 30, 2017 and 2016, respectively, and a benefit of $0.6 million and expense of $0.4 million for the six months ended June 30, 2017 and 2016, respectively. For the purpose of segment reporting, these amounts are included in corporate and therefore not reflected in our reportable segments.

We are currently under examination for the years 2006-2011, by the US, our primary taxing jurisdiction, and various taxing authorities. It is reasonably possible the amount of the unrecognized benefits with respect to unrecognized tax positions could change within the next twelve months. The portion of uncertain tax benefits that are not subject to the First American Financial Corporation (“FAFC”) indemnification could significantly increase or decrease and have an impact on net income. The FAFC indemnification could change by up to $14.0 million due to statutory requirements and would have no impact on net income.