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Income Taxes
 9 Months Ended
Sep. 27, 2020
Income Taxes
S. INCOME TAXES
A reconciliation of the United States federal statutory corporate tax rat
e
 to Teradyne’s effective tax rate was as follows:
 
    
For the Three Months
Ended
    
For the 
Nin
e
 Months
Ended
  
    
September
 27
,
2020
    
September
 
29
,
2019
    
September
 
27
,
2020
    
September
 
29
,
2019
  
US statutory federal tax rate
      21.0 %      21.0 %      21.0 %      21.0 % 
I
n
ternational provisions of the U.S. Tax
C
uts and

Jobs Act 
o
f 2017
      3.6       1.2       0.7       1.0  
Foreign taxes
      (6.9 )      (5.1 )      (5.8 )      (4.9 ) 
Tax cre
dits
      (1.1 )      (1.8 )      (1.4 )      (2.2 ) 
Discrete (benefit) expense
 related to
 the
internat
ional provisions of the U.S. 
Tax 
C
uts
and Jobs Act of 2017
      (0.6 )      (4.0 )      (0.2 )      2.3  
Discrete
(
benefit
) expense
related to
release of
reserve
s
for uncertain tax positions
 
      (0.5 )      0.1       (0.2 )      (6.9 ) 
Discrete benefit related to equity compensation
      (0.4 )      (0.7 )      (1.4 )      (1.5 ) 
Other, net
      0.5       (0.2 )      0.6       0.4  
  
 
 
    
 
 
    
 
 
    
 
 
  
Effective tax rate
      15.6 %      10.5 %      13.3 %      9.2 % 
  
 
 
    
 
 
    
 
 
    
 
 
  
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 27, 2020, 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 27, 2020 and December 31, 2019, Teradyne had $17.6 million and $21.2 million, respectively, of reserves for uncertain tax positions. The $3.6 million net decrease in reserves for uncertain tax positions is primarily related to U.S. state research and development credits generated in prior years, as well as inventory cost capitalization and equity compensation in prior years.
As of September 27, 2020, Teradyne does not anticipate a material change in the balance of unrecognized tax benefits during the next twelve months.
Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of September 27, 2020 and December 31, 2019, $1.4 million and $1.4 million, respectively, of interest and penalties were accrued for uncertain tax positions. For the nine months ended September 27, 2020 and September 29, 2019, expense of $0.0 million and $0.2 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 27, 2020 was $24.9 million, or $0.14 per diluted share. 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 holiday is scheduled to expire on December 31, 2020. Teradyne is currently in discussion with the Singapore Economic Development Board with respect to extension of the tax holiday for periods after December 31, 2020.