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INCOME TAX | 3 Months Ended
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Nov. 30, 2018
Income Tax Disclosure [Abstract] |
Income tax | NOTE 12. INCOME TAX For the three months ended November 30, 2018, the Company's effective tax rate of 22.4% was greater than the U.S. statutory income tax rate of 21.0%. The effective tax rate is determined by computing the estimated annual effective tax rate, which includes provisional estimates for certain components of the Tax Cuts and Jobs Act (“TCJA”), adjusted for discrete items, if any, which are taken into account in the appropriate period. Items that impacted the effective tax rate included:
i. | non-deductible compensation expense; and
ii. | state and local taxes.
For the three months ended November 30, 2017, the Company's effective tax rate of 20.9% was lower than the U.S. statutory income tax rate of 35.0% due to:
i. | the proportion of the Company's global income from operations in jurisdictions with lower statutory tax rates than the U.S., including Poland, which has a statutory income tax rate of 19.0%;
ii. | a permanent tax benefit recorded for stock awards that vested during the first quarter of fiscal 2018; and
iii. | a non-taxable gain on assets related to the Company's non-qualified benefits restoration plan.
For the three months ended November 30, 2017, the Company’s effective income tax rate from discontinued operations of 39.2% was greater than the U.S. statutory income tax rate of 35.0%, primarily due to losses from operations in certain jurisdictions in which the Company maintains a valuation allowance, thus providing no benefit for such losses. As of November 30, 2018 and August 31, 2018, the reserve for unrecognized income tax benefits related to the accounting for uncertainty in income taxes was $3.1 million, which, if recognized, would have decreased the Company’s effective income tax rate at the end of each respective period. The Company's policy classifies interest recognized on an underpayment of income taxes and any statutory penalties recognized on a tax position as income tax expense. For the three months ended November 30, 2018, the Company recorded immaterial amounts of accrued interest and penalties on unrecognized income tax benefits. The Company files income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, CMC and its subsidiaries are subject to examination by various taxing authorities. The following is a summary of tax years subject to examination: U.S. Federal — 2015 and forward U.S. States — 2009 and forward Foreign — 2011 and forward In addition, the Company is under examination by certain state revenue authorities for fiscal 2009 and fiscal years 2015 through 2017. Management believes the Company's recorded income tax liabilities as of November 30, 2018 sufficiently reflect the anticipated outcome of these examinations. On December 22, 2017, the President signed the TCJA into law. ASC 740 requires the change in tax law to be accounted for in the period of enactment. Due to complexities involved in accounting for the TCJA, the SEC's Staff Accounting Bulletin ("SAB") 118 provides a measurement period, which should not extend beyond one year from the date of enactment, to complete the accounting under ASC 740. During the first quarter of fiscal 2019, the impact of the TCJA to the Company’s income tax expense was immaterial. As of November 30, 2018, the Company has completed its accounting for the remeasurement of the Company’s deferred tax balances. Additionally, the Company has concluded there is minimal to no impact on the Company’s financial statements as a result of the following provisions of the TCJA: deductibility limitations on meal and entertainment-related expenses and base erosion anti-abuse tax. As of November 30, 2018, the Company continues to evaluate the accounting for the following provisions of the TCJA: (i) recognition of the one-time toll charge on certain undistributed earnings of non-U.S. subsidiaries with associated foreign tax credits; (ii) a new tax on global intangible low-taxed income ("GILTI"); (iii) deductibility limitations on compensation for covered employees; (iv) deductibility limitations on business interest expense; and (v) a new tax on foreign-derived intangible income. The Company has elected to treat the new GILTI tax as a current period cost. The impacts of the legislation on the Company’s tax expense may differ from the estimates recorded through November 30, 2018 and may be adjusted accordingly over the remainder of the SAB 118 measurement period. The Company continues to evaluate the impact of the TCJA and monitor regulatory developments affecting the Company’s assertion to indefinitely reinvest all undistributed foreign earnings. The Company will complete its analysis during the remainder of the SAB 118 measurement period.

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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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