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Income Taxes | 9 Months Ended
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Sep. 29, 2019
Income Taxes | T. INCOME TAXES A reconciliation of the United States federal statutory corporate tax rate to Teradyne’s effective tax rate was as follows:
|  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | September 29, 2019 |  |  | September 30, 2018 |  |  | September 29, 2019 |  |  | September 30, 2018 |
US statutory federal tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Discrete expense related to U.S. transition tax |  |  | — |  |  |  | — |  |  |  | 3.9 |  |  |  | 0.0 |
Foreign taxes |  |  | (5.1 | ) |  |  | (4.4 | ) |  |  | (4.9 | ) |  |  | (3.7 | )
International provisions of the U.S. Tax Cuts and Jobs Act of 2017 |  |  | (2.8 | ) |  |  | (1.4 | ) |  |  | (0.6 | ) |  |  | (1.4 | )
Tax credits |  |  | (1.8 | ) |  |  | (1.9 | ) |  |  | (2.2 | ) |  |  | (2.1 | )
Discrete benefit related to equity compensation |  |  | (0.7 | ) |  |  | (0.1 | ) |  |  | (1.5 | ) |  |  | (2.2 | )
Discrete benefit related to release of reserves for uncertain tax positions |  |  | — |  |  |  | (0.1 | ) |  |  | (6.9 | ) |  |  | — |
Other, net |  |  | (0.1 | ) |  |  | 1.7 |  |  |  | 0.4 |  |  |  | 2.0 |
Effective tax rate |  |  | 10.5 | % |  |  | 14.8 | % |  |  | 9.2 | % |  |  | 13.6 | %
On a quarterly basis, Teradyne evaluates the realizability of the deferred tax assets by jurisdiction and assesses the need for a valuation allowance. As of September 29, 2019, Teradyne believes that it will ultimately realize the deferred tax assets recorded on the condensed consolidated balance sheet. However, should Teradyne believe that it is more-likely-than-not that the deferred tax assets would not be realized, the tax provision would increase in the period in which Teradyne determined that the realizability was not likely. Teradyne considers the probability of future taxable income and historical profitability, among other factors, in assessing the realizability of the deferred tax assets. As of September 29, 2019 and December 31, 2018, Teradyne had $13.6 million and $43.4 million, respectively, of reserves for uncertain tax positions. The $29.8 million net decrease in reserves for uncertain tax positions is primarily composed of reductions in uncertain tax positions amounting to $22.4 million related to transfer pricing and $7.2 million associated with U.S. research and development tax credits. These reductions primarily resulted from the conclusion of the U.S. Federal income tax audit for the year ended December 31, 2015. As of September 29 , 2019, Teradyne does not anticipate a material change in the balance of unrecognized tax benefits during the next twelve months. On July 27, 2015, in Altera Corp. v. Commissioner (“Altera”), the U.S. Tax Court issued an opinion invalidating the regulations relating to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was issued by the Tax Court in December 2015. The IRS appealed the decision in June 2016. On July 24, 2018, the Ninth Circuit Federal Court issued a decision that was subsequently withdrawn and a reconstituted panel has conferred on the appeal. On June 7, 2019, the Ninth Circuit Federal Court upheld the cost-sharing regulations. Due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits or obligations, the outcome of the appeals process, and questions regarding jurisdiction, Teradyne has not established any income tax reserves as of September 29 , 2019 related to Altera. Teradyne estimates that including stock-based compensation in Teradyne’s intercompany cost-sharing arrangement could result in a potential tax reserve of $5 million to $11 million. Teradyne will continue to monitor ongoing developments and potential impacts to our consolidated financial statements. Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of September 29, 2019 and December 31, 2018, $0.5 million and $0.3 million, respectively, of interest and penalties were accrued for uncertain tax positions. For the nine months ended September 29, 2019 and September 30, 2018, expense of $0.2 million and $0.1 million, respectively, was recorded for interest and penalties related to income tax items. Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the nine months ended September 29, 2019 was $12.0 million, or $0.07 per diluted share. The tax savings due to the tax holiday for the nine months ended September 30, 2018 was $8.9 million, or $0.05 per diluted share. The tax holiday is scheduled to expire on December 31, 2020.

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- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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