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Income Taxes
 9 Months Ended
Sep. 30, 2023
Income Taxes  
Income Taxes

Note 13. Income Taxes

We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income (loss) and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense.

The effective tax rate for the three months ended September 30, 2023, was a benefit of 194.0%, compared to a benefit of 3.4% for the three months ended September 30, 2022. The primary driver of the change in our effective tax rate was attributable to the release of our valuation allowance related to the future realization of deferred tax assets. We recorded an income tax benefit of $14.7 million and an income tax benefit of $0.1 million for the three months ended September 30, 2023 and 2022, respectively.

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The effective tax rate for the nine months ended September 30, 2023, was a benefit of 407.1%, compared to an expense of 0.5% for the nine months ended September 30, 2022. The primary driver of the change in the Company’s effective tax rate was attributable to the release of our valuation allowance related to the future realization of deferred tax assets. We recorded an income tax benefit of $16.3 million and an income tax expense of $0.1 million for the nine months ended September 30, 2023 and 2022, respectively.

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As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of September 30, 2023, in part because in the current year we achieved three years of cumulative pretax income in the U.S. federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes of $17.9 million are realizable. We therefore reduced the valuation allowance accordingly, which resulted in the increased effective tax rate benefit in the three and nine months ended September 30, 2023 as discussed above.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely-than-not to sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company currently is not under examination in any jurisdictions.