Provision for Income Taxes
|9 Months Ended|
Jun. 30, 2018
|Income Tax Disclosure [Abstract]|
|Provision for Income Taxes||
Note 13 - Provision for Income Taxes
On December 22, 2017, the U.S. government enacted comprehensive tax legislation known as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes broad and complex changes to the U.S. tax code, including a reduction in the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. For the fiscal year ending September 30, 2018, the Company will record its income tax provision based on a blended U.S. statutory tax rate of 24.5%, which is based on a proration of the applicable tax rates before and after the effective date of the Tax Act, and the effect of applicable state income taxes. The federal statutory rate of 21% will apply for fiscal years beginning after September 30, 2018.
During the three months and nine months ended June 30, 2018, the Company recorded a provisional discrete tax benefit of $0.9 million and $4.4 million, respectively, related to the Tax Act, primarily due to adjusting its U.S. deferred tax liabilities by the same amount, reflecting the reduction in the U.S. federal corporate tax rate. This net reduction in deferred tax liabilities also included the estimated impact on the Company’s net state deferred tax assets.
The Company’s effective tax rate for the three months ended June 30, 2018 and 2017 was 9.5% and 32.1%, respectively. The effective tax rate for the three months ended June 30, 2018 was lower than the comparable prior year period primarily due to the decrease in the federal corporate tax rate and the benefit of a tax credit recorded during the three months ended June 30, 2018 related to the enactment of the Tax Act. Similarly, the Company’s effective tax rate for the nine months ended June 30, 2018 and 2017 was 13.1% and 34.9%, respectively, due primarily to the decrease in the federal corporate tax rate and the benefit of a tax credit recorded during the nine months ended June 30, 2018 related to the enactment of the Tax Act. The effective tax rate for the three and nine months ended June 30, 2018 was also reduced by a $1.3 million permanent tax benefit resulting from the deduction of the excess fair market value of options exercised under 2010 Non-Plan Stock Option Agreements over the exercise price (see Note 10—Equity).
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef