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Income Taxes | 6 Months Ended
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Jun. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 9. INCOME TAXES The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. The following is a summary of our provision for income taxes and effective tax rate from continuing operations (dollars in thousands):
|  | For the Quarter Ended June 30, |  |  | For the Year to Date Ended June 30, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Pretax income |  | $ | 1,781 |  |  | $ | 11,804 |  |  | $ | 33,376 |  |  | $ | 33,186 |
Provision for income taxes |  | $ | 2,302 |  |  | $ | 2,940 |  |  | $ | 8,709 |  |  | $ | 6,438 |
Effective rate |  |  | 129.3 | % |  |  | 24.9 | % |  |  | 26.1 | % |  |  | 19.4 | %
As of December 31, 2018, a valuation allowance of $48.0 million was maintained with respect to our foreign tax credits, state net operating losses and Illinois edge credits. After considering both positive and negative evidence related to the realization of these deferred tax assets, we have reduced the valuation allowance during the quarter ended June 30, 2019 by $0.8 million to reflect the results of a Florida income tax audit and the realizability of that state’s net operating loss carryforward. As of June 30, 2019, the total valuation allowance attributable to our foreign tax credits, state net operating losses and Illinois edge credits is $47.2 million. The effective tax rate for the quarter and year to date ended June 30, 2019 was primarily impacted by a $2.4 million unfavorable adjustment related to the partial non-deductibility of the FTC settlement, which increased the effective tax rate for the quarter and year to date by 132.5% and 7.1%, respectively. The effective tax rate for the quarter and year to date ended June 30, 2019 also includes a $0.5 million net benefit associated with the results of a Florida income tax audit covering the years ended December 31, 2014 through December 31, 2016, which decreased the effective tax rate by 28.2% and 1.5%, respectively. For the quarter and year to date ended June 30, 2018, the effective tax rate was primarily impacted by tax reserves and the tax effect of stock-based compensation. The effect of these discrete items decreased the effective tax rate for the quarter and year to date by 2.1% and 6.7%, respectively. We estimate that it is reasonably possible that the gross liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $1.5 million in the next twelve months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. The income tax rate for the quarter and year to date ended June 30, 2019 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of June 30, 2019, we had accrued $1.6 million as an estimate for reasonably possible interest and accrued penalties. Our tax returns are routinely examined by federal, state and local tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service has completed its examination of our U.S. income tax returns through our tax year ended December 31, 2014. Accumulated Other Comprehensive Income Effective January 1, 2019, the Company adopted ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”). This new guidance provides the option to reclassify stranded tax effects within AOCI to retained earnings in each period when the effect of the change in the U.S. federal corporate income tax rate in the Tax Cut and Jobs Act is recorded. The Company evaluated and concluded the stranded tax effects were immaterial and elected not to reclassify the income tax effects of the Tax Cuts and Jobs Act from AOCI to retained earnings.

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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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