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Income Taxes
 9 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
Note 12. Income Taxes

The Company computes its income tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date pre-tax loss from recurring operations and adjusting for discrete tax items arising in that quarter. The Company's income tax benefit was $70.6 million on pretax gains of $8.7 million for the three months ended September 30, 2023 and income tax expense of $111.1 million on pretax losses of $78.5 million for the nine months ended September 30, 2023, which resulted in a negative effective tax rate of 811% and 142%, respectively. The Company’s effective tax rate differs from the U.S. statutory rate of 21% primarily due to seasonality of the pretax losses incurred during the year, an increase in its valuation allowance, foreign income inclusion under global intangible low-taxed income (“GILTI”), and non-deductible stock-based compensation. The income tax benefit recorded for the three months ended September 30, 2023 is due to the decrease in cumulative pretax losses which decreased the year-to-date income tax expense as of September 30, 2023 and reduced the negative effective tax rate.

The Company’s income tax expense was $2.8 million on pretax losses of $12.8 million for the three months ended September 30, 2022 and $10.8 million on pretax losses of $38.5 million for the nine months ended September 30, 2022, which resulted in a negative effective tax rate of 22% and 28%, respectively. The Company’s effective tax rate differs from the U.S. statutory rate of 21% primarily due to foreign income inclusion under GILTI, non-deductible stock-based compensation, and valuation allowances.
ASC 740, Income Taxes, provides for the recognition of deferred tax assets if realization of such assets is more likely than not. In assessing the need for any additional valuation allowance as of September 30, 2023,
the Company considered all available evidence both positive and negative, including potential for prudent and feasible tax planning strategies.