XML 32 R21.htm IDEA: XBRL DOCUMENT v3.23.1
INCOME TAXES
 3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company recorded income tax expense of $14.2 million and $8.7 million for the three months ended March 31, 2023 and 2022, respectively. The Company's effective income tax rate was 29.8% and 26.1% for the three months ended March 31, 2023 and 2022, respectively. For the three months ended March 31, 2023 and 2022, the income tax expense each period differed due to an overall pre-tax income increase which resulted in the significant fluctuation in the effective tax rate.

The Company’s 2023 and 2022 tax expense and rates differed from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of foreign income tax rate differential on the mix of earnings, non-deductible royalty expenses in certain foreign jurisdictions, and certain permanent foreign inclusion items on the domestic provision.

The Company continues to monitor the realization of its deferred tax assets and assesses the need for a valuation allowance. The Company analyzes available positive and negative evidence to determine if a valuation allowance is needed based on the weight of the evidence. This objectively verifiable evidence primarily includes the past three years' profit and loss positions. This process requires management to make estimates, assumptions, and judgments that are uncertain in nature. The Company has established valuation allowances with respect to certain deferred tax assets in the U.S. and certain foreign jurisdictions and continues to monitor and assess the need for valuation allowances in all its jurisdictions.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that includes, among other provisions, changes to the U.S. corporate income tax system, including the corporate alternative minimum tax (CAMT) which is a fifteen percent minimum tax based on "adjusted financial statement income" effective for tax years beginning after December 31, 2022, and a one percent excise tax on net repurchases of stock after December 31, 2022. Under CAMT, corporations with average annual financial statement income exceeding $1 billion are taxed at a flat 15% rate, if the CAMT liability exceeds a corporation’s regular corporate tax liability. The determination of annual financial statement income is a complex computation with multiple adjustments. Titan has evaluated the interim guidance provided and based on its history of income Titan is significantly below the $1 billion threshold. Titan does not anticipate being materially impacted by the law in the future.