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Provision for Income Taxes
3 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
Provision for Income Taxes
Provision for Income Taxes
The effective rates for income taxes were 11.9% and 199.5% for the three months ended March 31, 2018 and 2017, respectively. The effective tax rate for the three months ended March 31, 2018 was lower than the effective tax rate for the three months ended March 31, 2017, primarily due to pre-tax losses which are partially offset by the recording of certain valuation allowances and shortfalls from the share based compensation in 2018.
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted in the United States. The Company recognized the income tax effects of the Tax Act in its 2017 financial statements in accordance with Staff Accounting Bulletin 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the Tax Act was signed into law. As noted in its 2017 audited consolidated financial statements, the Company was able to reasonably estimate certain effects and, therefore, recorded provisional amounts associated with the one-time transition tax on indefinitely reinvested foreign earnings and the adjustment to our deferred tax assets and liabilities for the reduction in the corporate income tax rate. The Company did not identify items for which the income tax effects of the Tax Act have not been completed and a reasonable estimate could not be determined.
The Company has not made any additional measurement period adjustments related to these items during the three months ended March 31, 2018. As the Company continues its analysis of the Tax Act, reviews all information, collects and prepares necessary data and interprets any additional guidance, it may make adjustments to the provisional amounts that have been recorded that may materially impact the Company's provision for income taxes. Any subsequent adjustment will be recorded to current income tax expense when the analysis is completed.
The Company evaluates on a quarterly basis whether its deferred tax assets are realizable which requires significant judgment. The Company considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance. To the extent the Company believes it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against deferred tax assets, which increase income tax expense in the period when such a determination is made.
A significant portion of the Company's deferred tax assets relate to U.S. federal and state taxing jurisdictions. Realization of these deferred tax assets is dependent on future U.S. pre-tax earnings. Due to its challenged U.S. results, the Company incurred significant net operating losses (“NOLs”) in these jurisdictions in 2017 and continued losses during the three months ended March 31, 2018. The Company continues to believe that the weight of the positive evidence outweighs the negative evidence regarding the realization of the majority of the net deferred tax assets related to U.S. federal and state taxing jurisdictions. However, consistent with prior periods, valuation allowances have been recorded against select U.S. State and foreign net operating losses.