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Income Taxes
 9 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

Note 8. Income Taxes

The Company’s income tax expense and balance sheet accounts reflect the results of the Company and its subsidiaries.

In accordance with ASC 740-270, Interim Reporting, at the end of each interim period, the Company is required to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on an interim period. However, in certain circumstances where the Company is unable to make a reliable estimate of the annual effective tax rate, ASC 740-270 allows the actual effective tax rate for the interim period to be used. As of September 30, 2024, the Company calculated its effective rate and applied that rate to the results for the three and nine months ended September 30, 2024. The Company used this approach because it was unable to reasonably estimate its annual effective rate due to the variability of the rate as a result of small changes in forecasted income and fluctuations in annual pre-tax income and loss between quarters.

The effective income tax rate for the three and nine months ended September 30, 2024 was (9.7)% and (0.8)%, respectively. The Company’s effective income tax rate for the three and nine months ended September 30, 2024 was lower than the U.S. federal statutory rate of 21% primarily due to a jurisdictional mix of earnings with the Company recording significant Sterling acquisition expenses in the U.S., nondeductible share-based compensation, and U.S. state income taxes.

The effective income tax rate for the three and nine months ended September 30, 2023 was 31.2% and 29.8%, respectively. The Company’s effective income tax rate for the three and nine months ended September 30, 2023 was higher than the U.S. federal statutory rate of 21%, primarily due to nondeductible share-based compensation, the Global Intangible Low-Taxed Income (“GILTI”) inclusion, and U.S. state income taxes.