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Income Taxes | 9 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Tredegar recorded tax expense of $8.4 million on pretax net income of $59.8 million in the first nine months of 2019. Therefore, the effective tax rate in the first nine months of 2019 was 14.1%, compared to 172.1% in the first nine months of 2018. The quarterly effective tax rate is an estimate based on a proration of the components of the Company’s estimated annual effective tax rate and discrete items recorded during the first nine months of the year. The significant differences between the U.S. federal statutory rate and the effective income tax rate for the nine months ended September 30, 2019 and 2018 are as follows:
(In thousands, except percentages) | 2019 |  | 2018
Nine Months Ended September 30, | Amount |  | % |  | Amount |  | %
Income tax expense at federal statutory rate | $ | 12,562 |  |  | 21.0 |  |  | $ | 383 |  |  | 21.0 |
U.S. Tax on Foreign Branch Income | 2,541 |  |  | 4.2 |  |  | 953 |  |  | 52.3 |
Foreign rate differences | 1,864 |  |  | 3.1 |  |  | 1,159 |  |  | 63.6 |
State taxes, net of federal income tax benefit | 633 |  |  | 1.1 |  |  | 87 |  |  | 4.8 |
Non-deductible expenses | 363 |  |  | 0.6 |  |  | 230 |  |  | 12.6 |
Goodwill impairment | — |  |  | — |  |  | 1,788 |  |  | 98.2 |
Valuation allowance for capital loss carry-forwards | — |  |  | — |  |  | 245 |  |  | 13.4 |
Stock-based compensation | (148 | ) |  | (0.2 | ) |  | 173 |  |  | 9.5 |
Changes in estimates related to prior year tax provision | (188 | ) |  | (0.3 | ) |  | (414 | ) |  | (22.7 | )
Research and development tax credit | (475 | ) |  | (0.8 | ) |  | (318 | ) |  | (17.4 | )
Foreign Derived Intangible Income (FDII) | (633 | ) |  | (1.1 | ) |  | (472 | ) |  | (25.9 | )
Tax impact of dividend received | (1,016 | ) |  | (1.7 | ) |  | — |  |  | — |
Foreign tax incentives | (2,157 | ) |  | (3.6 | ) |  | (1,344 | ) |  | (73.8 | )
Valuation allowance due to foreign losses and impairments | (2,395 | ) |  | (4.0 | ) |  | 185 |  |  | 10.1 |
Tax contingency accruals and tax settlements | (2,527 | ) |  | (4.2 | ) |  | 480 |  |  | 26.4 |
Effective income tax rate | $ | 8,424 |  |  | 14.1 |  |  | $ | 3,135 |  |  | 172.1 |
Tredegar accrues U.S. federal income taxes on unremitted earnings of all foreign subsidiaries where required. However, due to changes in the taxation of dividends under the U.S. Tax Cuts and Jobs Act of 2017, Tredegar will only record U.S. federal income taxes on unremitted earnings of its foreign subsidiaries where Tredegar cannot take steps to eliminate any potential tax on future distributions from its foreign subsidiaries. The Brazilian federal statutory income tax rate is a composite of 34.0% (25.0% of income tax and 9.0% of social contribution on income). Terphane Ltda.’s manufacturing facility in Brazil is the beneficiary of certain income tax incentives that allow for a reduction in the statutory Brazilian federal income tax rate to 15.25% levied on the operating profit on certain of its products. The incentives have been granted for a 10-year period, from the commencement date of January 1, 2015. The benefit from the tax incentives was $2.1 million and $1.3 million in the first nine months of 2019 and 2018, respectively. Tredegar and its subsidiaries file income tax returns in the U.S., various states, and jurisdictions outside the U.S. With exceptions for some U.S. states and non-U.S. jurisdictions, Tredegar and its subsidiaries are no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2014. In the third quarter of 2019, the IRS concluded its examination of the years 2014, 2015, 2016, and 2017, requiring only minor adjustments for those years. With the audit concluding during the third quarter, the Company considers the years 2014-2017 to be effectively settled, allowing for the reversal of $2.4 million of the reserves previously established for uncertain tax positions. The Company includes tax-related interest and penalties in income tax expense. As of September 30, 2019, $0.2 million of interest and penalties are accrued as a tax liability. During the nine months ended September 30, 2019, a minimal amount of net interest income was recorded.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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