Income Taxes (Tables)

6 Months Ended

Jun. 30, 2016

For the three and six months ended June 30, 2016 and 2015, the effective tax rates, including discrete items, were as follows:

The below chart provides a reconciliation between our reported effective tax rates and the EAETR.



	Three Months Ended June 30,
	2016								2015
in millions, except percentages	Before Tax			Tax			Effective Tax Rate % Impact		Before Tax			Tax			Effective Tax Rate % Impact
Combined operations	$	38.4		$	12.6		32.8	%	$	43.6		$	16.5		37.8	%

Discrete items:
Separation costs ⁽¹⁾	4.7			1.3					4.8			1.1
Restructuring & other (income) charges	1.0			0.2					(0.4		)	(0.2		)
Results of legal entities with full valuation allowances ⁽²⁾	(0.9		)	—					2.5			—
Other tax only discrete items	—			(0.1		)			—			—
Total discrete items	4.8			1.4					6.9			0.9

Combined operations, before discrete items	$	43.2		$	14.0				$	50.5		$	17.4
Quarterly effect of changes in the EAETR							32.4	%							34.5	%

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(1)	Separation costs are primarily taxed at domestic tax rates resulting in a material tax benefit, see Note 13 for more information on the costs incurred.


(2)	In accordance with GAAP, legal entities within the combined results of Ingevity with full valuation allowances are treated discretely for income tax purposes.



	Six Months Ended June 30,
	2016							2015
in millions, except percentages	Before Tax		Tax			Effective Tax Rate % Impact		Before Tax			Tax			Effective Tax Rate % Impact
Combined operations	$	58.2	$	22.6		38.8	%	$	80.0		$	28.7		35.9	%

Discrete items:
Separation costs ⁽¹⁾	11.1		2.3					6.3			1.4
Restructuring & other (income) charges	5.6		1.1					(0.7		)	(0.3		)
Results of legal entities with full valuation allowances ⁽²⁾	2.8		—					4.2			—
Other tax only discrete items	—		(0.2		)			—			0.3
Total discrete items	19.5		3.2					9.8			1.4

Combined operations, before discrete items	$	77.7	$	25.8				$	89.8		$	30.1
EAETR ⁽³⁾						33.2	%							33.5	%

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(1)	Separation costs are primarily taxed at domestic tax rates resulting in a material tax benefit, see Note 13 for more information on the costs incurred.


(2)	In accordance with GAAP, legal entities within the combined results of Ingevity with full valuation allowances are treated discretely for income tax purposes.


(3)	The decrease in the EAETR for the six months ended June 30, 2016 as compared to June 30, 2015 is primarily due to income mix between domestic and foreign subsidiaries.