INCOME TAXES

The effective tax rate was 27.8 percent and 28.0 percent for the third quarter and first nine months of 2016, respectively, compared to 32.0 percent and 31.6 percent for the third quarter and first nine months of 2015, respectively. The decrease in the effective tax rate for the third quarter and first nine months of 2016 compared to 2015 was primarily due to the Company's adoption of ASU No. 2016-09.

As disclosed in Note 2, during the second quarter of 2016, the Company adopted ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting.” Therefore, effective January 1, 2016, excess tax benefits for share-based payments are recognized in the income tax provision rather than in additional paid-in capital. The impact on the Company's financial statements for the three and nine months ended September 30, 2016 is summarized below:



	Three Months Ended		Nine Months Ended
	September 30, 2016		September 30, 2016
Decrease in Other capital	$	11,322	$	41,025
Decrease in Income taxes and increase in Net income	$	11,322	$	41,025
Increase in Average shares and equivalents outstanding - diluted	667,822		602,877
Increase in Basic net income per common share	$	0.12	$	0.45
Increase in Diluted net income per common share	$	0.09	$	0.37

At December 31, 2015, the Company had $33.9 million in unrecognized tax benefits, the recognition of which would have an effect of $30.0 million on the current provision for income taxes. Included in the balance of unrecognized tax benefits at December 31, 2015 was $3.5 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits comprised primarily of items related to federal audits of partnership investments and expiring statutes in foreign and state jurisdictions.

The Company classifies all income tax related interest and penalties as income tax expense. At December 31, 2015, the Company had accrued $8.6 million for the potential payment of income tax interest and penalties.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2015 during the first nine months of 2016.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. As of September 30, 2016, there were no examinations being conducted by the IRS, however, the statute of limitations has not expired for the 2013, 2014 and 2015 tax years.

As of September 30, 2016, the Company is subject to non-U.S. income tax examinations for the tax years of 2008 through 2015. In addition, the Company is subject to state and local income tax examinations for the tax years 2005 through 2015.