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Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

12. Income Taxes

 

Our effective income tax rate fluctuates from the U.S. statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates, the impact of U.S. state and local taxes, the realizability of deferred tax assets and other differences related to the recognition of income and expense between GAAP and tax accounting.

 

Our effective income tax rate for the three months ended September 30, 2022 was 3.5%, compared with 17.5% for the three months ended September 30, 2021. The lower effective income tax rate for the three months ended September 30, 2022 was primarily attributable to the impact of valuation allowances between periods. For the three months ended September 30, 2022, due to valuation allowances, only certain income tax expense related to Colombia and certain U.S. states was recorded, resulting in a lower overall effective income tax rate.

 

Our effective income tax rate for the nine months ended September 30, 2022 was 8.3%, compared with 15.7% for the nine months ended September 30, 2021. The lower effective income tax rate for the nine months ended September 30, 2022 was primarily attributable to the impact of valuation allowances between periods. For the period ended September 30, 2022, due to valuation allowances, only certain income tax expense related to Colombia and certain U.S. states was recorded, resulting in a lower overall effective income tax rate.
 

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and when necessary, valuation allowances are provided. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We assess the realizability of our deferred tax assets quarterly and consider carryback availability, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In the first three quarters of 2022, the effective tax rate takes into consideration the estimated valuation allowance based on forecasted 2022 income.

 

We continue to monitor income tax developments in the United States and other countries where we have legal entities. We will incorporate into our future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.