INCOME TAXES

The following table summarizes our effective tax rate and income tax (expense) benefit for the three and nine months ended September 30, 2016 and 2015 (in thousands except for percentages):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Effective tax rate	(21.1	)%	26.9	%	13.2	%	(1.1	)%
Income tax (expense) benefit	(6,467	)	(38,761	)	5,994		1,246

For the three and nine months ended September 30, 2016, we recognized an income tax expense of $6.5 million and an income tax benefit $6.0 million, respectively, representing an effective tax rate of (21.1)% and 13.2%, respectively. Under GAAP, quarterly effective tax rates may vary significantly depending on the actual operating results in the various tax jurisdictions, and significant transactions, as well as changes in the valuation allowance related to the expected recovery of deferred tax assets.

The difference between the expected statutory federal tax benefit of 35% and the (21.1)% effective tax expense for the three months ended September 30, 2016, was primarily attributable to the increase in valuation allowance against our deferred tax assets, partially offset by the tax benefit of prior year return to provision true-ups.

The difference between the expected statutory federal tax benefit of 35% and the 13.2% effective tax benefit for the nine months ended September 30, 2016, was primarily attributable to the increase in valuation allowance against our deferred tax assets.

For the three and nine months ended September 30, 2015, we recognized income tax expense of $38.8 million and an income tax benefit of $1.2 million, respectively, representing an effective tax rate of 26.9% and (1.1)%, respectively. The difference between the expected statutory federal tax expense of 35% and the (1.1)% effective tax benefit for the nine months ended September 30, 2015, was primarily attributable to the current and deferred tax expense recorded on the sale of our Priority Review Voucher, offset by the partial release of the US federal valuation allowance.

At September 30, 2016, we had gross unrecognized tax benefits of $1.5 million compared to $3.3 million at December 31, 2015, representing a net decrease of $1.8 million during the nine months ended September 30, 2016. If recognized, none of unrecognized tax benefits would affect the Company’s effective tax rate. We did not recognize any interest and penalties related to unrecognized tax benefits during the nine months ended September 30, 2016.

We are currently under income tax audit examination for our United States federal income tax return for 2014. At this time, we do not anticipate that the conclusion of the audit will have a material effect on the financial statements.