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Income Taxes
 6 Months Ended
Jan. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our effective tax rate for the three months ended January 31, 2024 was (230.6)%, which includes a net discrete tax benefit of $286,000 primarily related to the PST Divestiture. Our effective tax rate for the six months ended January 31, 2024 was (100.8)%, which includes a net discrete tax expense of $1,762,000 primarily related to the anticipated timing of the settlement of contingent consideration related to the PST Divestiture. Upon settlement of the contingent consideration, if any, we would expect an offsetting net discrete tax benefit due to the utilization of capital losses that had been previously subject to a full valuation allowance.

Our effective tax rate for the three months ended January 31, 2023 was 4.4%, which includes a net discrete tax expense of $122,000 primarily related to the settlement of stock-based awards, partially offset by the finalization of certain tax accounts in connection with the filing of our fiscal 2022 Canadian income tax returns. Our effective tax rate for the six months ended January 31, 2023 was 5.0%, which includes a nominal net discrete tax expense primarily related to the settlement of stock-based awards, partially offset by the deductible portion of CEO transition costs.

Excluding discrete items, our effective tax rate for the three and six months ended January 31, 2024 and 2023 was (52.0)% and 11.0%, respectively. For purposes of determining our estimated annual effective tax rate for fiscal 2024, the estimated gain on the PST Divestiture is considered a significant, unusual or infrequently occurring discrete tax item and is excluded from the computation of our effective tax rate. For purposes of determining our estimated annual effective tax rate for fiscal 2023, CEO transition costs are considered significant, unusual or infrequently occurring discrete tax items and are excluded from the computation of our effective tax rate. The change in rate from 11.0% to (52.0)% is primarily due to changes in expected product and geographic mix.
At January 31, 2024 and July 31, 2023, total unrecognized tax benefits were $9,115,000 and $9,166,000, respectively, including interest of $286,000 and $210,000, respectively. Unrecognized tax benefits result from income tax positions taken or expected to be taken on our income tax returns for which a tax benefit has not been recorded in our consolidated financial statements. We believe it is reasonably possible that the gross unrecognized tax benefits could decrease by as much as $610,000 in the next twelve months due to the expiration of a statute of limitations related to federal, state and foreign tax positions.

Our U.S. federal income tax returns for fiscal 2020 through 2022 are subject to potential future Internal Revenue Service ("IRS") audit. None of our state income tax returns prior to fiscal 2019 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition.