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Income Taxes | 9 Months Ended
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Feb. 28, 2025
Income Taxes | 7. INCOME TAXES Income tax expense was $1,230 during the three months ended February 28, 2025, and income tax benefit was $22,060 during the nine months ended February 28, 2025. Income tax benefit was $3,800 and $3,900 during the three and nine months ended February 29, 2024. Income tax expense for the quarter is related to changes in the Company’s forecasted pre-tax income using an estimated annualized effective tax rate. The net tax benefit for the nine month period is primarily related to pre-tax losses due to amortization expense and interest expense from the 3M FSD acquisition as well as an income tax benefit of $9,225 associated with goodwill impairment charges. The Organization for Economic Cooperation and Development (“OECD”) Pillar 2 global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, are intended to apply for tax years beginning in 2024. The Company is closely monitoring developments and evaluating the impact these new rules will have on our tax rate, including eligibility to qualify for certain safe harbors. Where no safe harbor is met, the Company has included in its income tax for the three and nine months ended February 28, 2025, a forecasted amount of “top-up” tax for its foreign subsidiaries as required under the applicable rules of the countries that have adopted the Pillar Two directives. The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of February 28, 2025 and May 31, 2024 were $4,336 and $2,739, respectively. Increases in unrecognized tax benefits are primarily associated with the acquired 3M FSD, including positions for transfer pricing and research and development credits.

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