Income Taxes (Tables)

6 Months Ended

Jun. 30, 2017

Schedule of Effective Income Tax Rate Reconciliation



	Three Months Ended June 30,
	2017								2016
In millions, except percentages	Before tax			Tax			Effective tax rate % impact		Before tax			Tax			Effective tax rate % impact
Consolidated operations	$	53.0		$	17.2		32.5	%	$	38.5		$	12.6		32.7	%

Discrete items:
Separation costs ⁽¹⁾	0.2			0.1					4.7			1.3
Restructuring & other (income) charges	1.1			—					1.0			0.2
Results of legal entities with full valuation allowances⁽²⁾	(0.3		)	—					(0.9		)	—
Other tax only discrete items	—			(0.6		)			—			(0.1		)
Total discrete items	1.0			(0.5		)			4.8			1.4

Consolidated operations, before discrete items	$	54.0		$	16.7				$	43.3		$	14.0
Quarterly effect of changes in the EAETR							30.9	%							32.3	%

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(1)	Separation costs are classified as deductible or non-deductible for income tax purposes and are primarily taxed at domestic tax rates, see Note 13 for more information on the costs incurred.


(2)	Legal entities within the consolidated results of Ingevity with full valuation allowances are treated discretely for income tax purposes.



	Six Months Ended June 30,
	2017							2016
In millions, except percentages	Before tax		Tax			Effective tax rate % impact		Before tax		Tax			Effective tax rate % impact
Consolidated operations	$	87.0	$	28.2		32.4	%	$	61.4	$	23.8		38.8	%

Discrete items:
Separation costs ⁽¹⁾	0.5		0.2					11.1		2.3
Restructuring & other (income) charges	3.4		0.6					5.6		1.1
Results of legal entities with full valuation allowances ⁽²⁾	1.5		—					2.8		—
Other tax only discrete items	—		(0.4		)			—		(0.2		)
Total discrete items	5.4		0.4					19.5		3.2

Consolidated operations, before discrete items	$	92.4	$	28.6				$	80.9	$	27.0
EAETR ⁽³⁾						31.0	%						33.4	%

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(1)	Separation costs are classified as deductible or non-deductible for income tax purposes and are primarily taxed at domestic tax rates, see Note 13 for more information on the costs incurred.


(2)	Legal entities within the consolidated 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, 2017, as compared to June 30, 2016 is primarily due to an increase in forecasted profits from our 70 percent owned joint venture and income mix between domestic and foreign subsidiaries. Our 70 percent owned joint venture is a limited liability company which is treated as a "pass through" entity for tax purposes. Although we consolidate 100 percent of the joint venture, only 70 percent of the earnings are included in the calculation of Ingevity's provision for income taxes.

For the three and six months ended June 30, 2017 and 2016, the effective tax rates, including discrete items, were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Effective tax rate	32.5	%	32.7	%	32.4	%	38.8	%