Income Taxes

9 Months Ended

Jul. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

7. Income taxes

We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period. The effective tax rate for the three and nine months ended July 31, 2020 was 8.9% and 16.0%, respectively.   The effective tax rate for the three and nine months ended July 31, 2019 was 21.4% and 22.8%, respectively. The effective tax rate for the three and nine months ended July 31, 2020 was lower than the comparable prior year periods primarily due to excess tax benefits associated with share-based payment transactions.

Due to our share-based payment transactions our income tax provision included a discrete tax benefit of $11,373 and $14,048 for the three and nine months ended July 31, 2020, respectively. Our income tax provision included a similar discrete tax benefit of $210 and $3,227 for the three and nine months ended July 31, 2019, respectively.

During the nine months ended July 31, 2019, a discrete tax expense of $4,866 was recorded to update the provisional amounts recognized in 2018 due to changes in interpretations and assumptions and the finalization of estimates related to the U.S. Tax Cuts and Jobs Act.

During the three months ended July 31, 2020 and July 31, 2019, we recorded a favorable adjustment to unrecognized tax benefits of $443 and $858, respectively. In addition, during the three months ended July 31, 2020 there was an increase of $5,664 in unrecognized tax benefits and, if recognized, the gross unrecognized tax benefits would be offset against assets currently recorded in the Consolidated Balance Sheet.