14. Income Taxes

The following table presents the (benefit from) provision for income taxes and our effective tax rate for the three and nine months ended April 30, 2015 and 2014:


	Three Months Ended						Nine Months Ended
	April 30,						April 30,
(in millions)	2015			2014			2015			2014
(Benefit from) provision for income taxes	$	(1.3	)	$	2.5		$	2.4		$	(6.1	)
Effective tax rate		-16	%		24	%		10	%		-35	%

The effective income tax rate on operations is based upon the estimated income for the year, the composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies.

Our effective tax rate for the three and nine months ended April 30, 2015 is lower than the statutory rate of 35% primarily due to income generated outside the United States in countries with lower tax rates, the U.S. manufacturing deduction, and tax credits in the U.S. and Canada. The tax (benefit) provision for the three and nine months ended April 30, 2015 includes discrete tax benefits totaling $2.9 million and $3.7 million, respectively. The discrete items for the three months ended April 30, 2015 consist of $3.0 million in favorable changes in reserves for uncertain tax positions partially offset by $0.1 million in miscellaneous unfavorable discrete items. The discrete tax benefit for the nine months ended April 30, 2015, consists primarily of $3.0 million in favorable changes in reserves for uncertain tax positions and $0.8 million in favorable benefit for the extension of U.S. Federal tax credits for research and development, or R&D, offset in part by $0.1 million in miscellaneous unfavorable discrete items.

Our effective tax rate before discrete items for the three and nine months ended April 30, 2014, respectively, was lower than the statutory rate of 35%, primarily due to lower foreign tax rates, and tax credits in the U.S. and Canada. The tax provision for the nine months ended April 30, 2014 includes certain discrete tax benefits totaling $10.6 million. The discrete items for the three months ended April 30, 2014 consist of $0.2 million in favorable changes in reserves for uncertain tax positions resulting from accretion of interest, expiration of the statute of limitations and other items, as well as $0.6 million for an unfavorable adjustment to a deferred item related to equity compensation, and $0.4 million in miscellaneous favorable discrete items. The discrete tax benefit for the nine months ended April 30, 2014, consists primarily of a reduction in a net deferred tax liability of $8.8 million associated with a change in classification of our Canadian operations, and a reduction in uncertain tax positions primarily associated with federal tax credits for R&D of $0.9 million following the conclusion of the Internal Revenue Service, or IRS, review for the fiscal year 2009, along with $0.9 million of other items.

We are subject to U.S. Federal income tax as well as the income tax of multiple state and foreign jurisdictions. As of April 30, 2015, we have concluded all U.S. Federal income tax matters through the year ended July 31, 2011. We accrue interest and, if applicable, penalties for any uncertain tax positions. This interest and penalty expense is treated as a component of income tax expense. At April 30, 2015 and July 31, 2014, we had approximately $0.3 million and $0.6 million, respectively, accrued for interest and penalties on unrecognized tax benefits.

At April 30, 2015, we had $4.4 million of unrecognized tax benefits for uncertain tax positions and $0.3 million of related accrued interest and penalties. We are unable to reasonably estimate the amount and period in which these liabilities might be paid.