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Income Taxes | 9 Months Ended
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Sep. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 8. Income Taxes Our income tax provision and the respective effective income tax rates are as follows (in millions, except for income tax rates):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2021 |  | 2020 |  | 2021 |  | 2020
Income tax provision |  | $ | 10.0 |  |  | $ | 25.4 |  |  | $ | 20.8 |  |  | $ | 49.0 |
Effective income tax rate |  | 30.9 | % |  | 23.5 | % |  | 26.1 | % |  | 30.2 | %
Our provision for income taxes for the three months ended September 30, 2021 was $10.0 million, resulting in an effective income tax rate of 30.9%. The provision includes a net discrete income tax benefit of $1.1 million, primarily related to adjustments resulting from tax return filings in several worldwide jurisdictions reduced by other tax reserve provisions. For the three months ended September 30, 2020, our provision for income taxes was $25.4 million, resulting in an effective tax rate of 23.5%, which included a discrete income tax expense of $16.1 million for the tax on the gain on the sale of MSTS and a net discrete tax expense of $2.7 million related to tax reserve provisions and adjustments resulting from tax return filings in several worldwide jurisdictions. Our provision for income taxes for the nine months ended September 30, 2021 was $20.8 million, resulting in an effective income tax rate of 26.1%. The provision includes discrete income tax benefits of $4.5 million related to the impact of a change in the United Kingdom's tax rate and $1.6 million related to an adjustment for the final purchase price allocation on the sale of MSTS, reduced by a net discrete tax expense of $1.2 million related to tax reserve provisions, adjustments related to the filing in several worldwide jurisdictions, and other worldwide tax adjustments. For the nine months ended September 30, 2020, our provision for income taxes was $49.0 million resulting in an effective tax rate of 30.2%, which included a discrete income tax expense of $16.1 million for the tax on the gain on the sale of MSTS and a net discrete expense of $7.1 million related primarily to adjustments resulting from tax return filings in several worldwide jurisdictions. Our income tax concession in Singapore, which reduces the income tax rate on qualified sales and derivative gains and losses, decreased foreign income taxes by $0.6 million and had a $0.01 impact on basic and diluted earnings per common share for the three months ended September 30, 2021. There was no impact for the three months ended September 30, 2020. Foreign income taxes decreased by $1.2 million and $1.5 million for the nine months ended September 30, 2021 and 2020, respectively. The impact to basic and diluted earnings per common share for the nine months ended September 30, 2021 and 2020 was $0.02. Our income tax provisions for the three and nine months ended September 30, 2021 and 2020 were calculated based on the estimated annual effective income tax rates for the 2021 and 2020 fiscal years, respectively. The actual effective income tax rate for the 2021 fiscal year may be materially different because of differences between estimated versus actual results and the geographic tax jurisdictions in which the results are earned. We have various tax returns under examination both in the U.S. and foreign jurisdictions. The most significant of these are in Denmark for the 2013 - 2019 tax years, South Korea for the 2011 - 2014 tax years, and the U.S. for 2017 - 2018 tax years. One of our subsidiaries in Denmark has been under audit for its 2013 - 2015 tax years since 2018 and was notified in March 2021 that its 2016 - 2019 tax years were also under examination. In January 2021, we received final tax assessments for the 2013 and 2014 tax years of approximately $0.6 million (DKK 3.7 million) and $0.8 million (DKK 4.9 million), respectively. We believe these assessments are without merit and are currently appealing the actions. In April 2021, we received a proposed tax assessment for the 2015 tax year of approximately $15.0 million (DKK 96.1 million), which we believe is without merit. We are in the process of responding to the proposed assessment and the 2016 - 2019 information requests. We have not yet received any proposed assessments related to the 2016 - 2019 tax years, which could be materially larger than the previous assessments if a similar methodology is applied. In 2017, the Korean branch of one of our subsidiaries received income tax assessment notices aggregating $9.5 million (KRW 11.3 billion) from the South Korea tax authorities relating to the 2011 - 2014 tax years. In May and August 2021, we received revised income tax assessments for these years reducing the aggregate assessments to $9.0 million (KRW 10.6 billion). We believe that these assessments are without merit and are currently appealing the actions. In addition, in January of 2020, we received a notice of examination from the U.S. IRS for the 2017 - 2018 tax years. In June 2021, we received a notice of proposed adjustment for certain immaterial items for the 2017 and 2018 tax years which we accepted and agreed to in August 2021. We are awaiting any additional information requests or notices of proposed adjustment. An unfavorable resolution of one or more of the above matters could have a material adverse effect on our operating results or cash flows in the quarter or year in which the adjustments are recorded, or the tax is due or paid. As examinations are still in process or have not yet reached the final stages of the appeals process, the timing of the ultimate resolution or payments that may be required cannot be determined at this time.

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