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Income Taxes
9 Months Ended
Sep. 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 27.6% and 31.0% for the three months ended September 30, 2017 and 2016, respectively, and 30.0% and 33.5% for the nine months ended September 30, 2017 and 2016, respectively.

For the three months ended September 30, 2017, when compared to 2016, the decrease in the effective income tax rate was primarily attributable to a favorable domestic out-of-period adjustment recorded in the third quarter of 2017 and favorable discrete items, partially offset by unfavorable foreign rate differentials, due to foreign exchange gain and losses in jurisdictions with tax rates lower than the U.S., and a nonrecurring prior year favorable adjustment related to contingent consideration recorded in connection with an acquisition.

For the nine months ended September 30, 2017 when compared to 2016, the decrease in the effective tax rate was primarily attributable to a favorable domestic out-of-period adjustment recorded in the third quarter of 2017 and favorable discrete items and favorable tax benefits related to the adoption of stock-based compensation accounting guidance, partially offset by unfavorable foreign rate differentials, due to foreign exchange gain and losses in jurisdictions with tax rates lower than the U.S., and 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 $0.1 million and expense of $0.5 million for the three months ended September 30, 2017 and 2016, respectively, and a benefit of $0.8 million and expense of $0.9 million for the nine months ended September 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 other state 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.