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Income Taxes
6 Months Ended
Jun. 30, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

11. Income Taxes

 

The Company’s effective income tax rate was 35.1% for the six months ended June 30, 2016, compared to 44.8% for the six months ended June 30, 2015.  The Domestic Production Activities Deduction (the “Section 199 Deduction”) was enacted as part of the American Jobs Creation Act of 2004 (as revised by the Emergency Economic Stabilization Act of 2008), and allows a deduction of 9% on the lesser of qualified production activities income or taxable income.  For tax purposes, the Company had net operating losses for the years ended December 31, 2015 and 2014, which have been carried back to prior years.  These carrybacks resulted in the loss of the benefits of previous Section 199 Deductions.  The loss of these benefits was recognized during the six months ended June 30, 2016, which reduced the tax benefit recorded for the six months ended June 30, 2016.

 

At June 30, 2015, the Company expected a loss before income taxes for financial statement purposes for the year ending December 31, 2015; however the Company expected to have taxable income for the year ending December 31, 2015, and the Section 199 Deduction was expected to provide a permanent tax benefit.  On June 15, 2015, legislation was enacted which permanently reduced the Texas Margin Tax rate.  This resulted in a permanent tax benefit that was recognized during the quarter ended June 30, 2015.  The interplay between the expected loss before income taxes for financial statement purposes, the permanent tax benefit expected to be provided by the Section 199 Deduction and the permanent tax benefit from the Texas Margin Tax rate resulted in a higher effective income tax rate for the six months ended June 30, 2015.