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Income Taxes
9 Months Ended
Sep. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company accounts for its provision for income taxes in accordance with ASC 740, "Income Taxes," which requires an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year. For the nine months ended September 30, 2017 and September 30, 2016, the Company's effective income tax rate was 22.3% and 14.8%, respectively. The effective income tax rate for the nine months ended September 30, 2017 was lower than the U.S. statutory rate of 35% primarily due to the recognition of excess tax benefits from employee share-based payments in Provision for income taxes as a result of the adoption of ASU 2016-09 on January 1, 2017, the provision to return true-up due to the filing of the U.S. federal income tax return, a reduction of a previously accrued tax liability due to obtaining approval from a local non-U.S. tax authority and earnings in non-U.S. jurisdictions, which in aggregate, have a lower effective tax rate. This reduction was partially offset by a non-cash charge related to the establishment of a valuation allowance on certain net deferred tax assets in Brazil. Excess tax benefits from employee share-based payments decreased the effective tax rate by 2.1% and the establishment of the Brazil valuation allowance increased the effective tax rate by 3.1%. The effective tax rate for the nine months ended September 30, 2016 was lower than the U.S. statutory rate of 35% primarily due to the tax treatment of the Hussmann gain. The gain, which was not subject to tax under the relevant local tax laws, decreased the effective tax rate by 5.5%. In addition, the reduction was driven by the provision to return true-up due to the filing of the U.S. federal income tax return, a reduction of a previously accrued tax liability due to obtaining a certification from a local non-U.S. tax authority and by earnings in non-U.S. jurisdictions, which in aggregate, have a lower effective tax rate. 
Total unrecognized tax benefits as of September 30, 2017 and December 31, 2016 were $115.5 million and $107.1 million, respectively. Although management believes its tax positions and related provisions reflected in the consolidated financial statements are fully supportable, it recognizes that these tax positions and related provisions may be challenged by various tax authorities. These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and information become available, including progress on tax audits, changes in interpretations of tax laws, developments in case law and closing of statute of limitations. To the extent that the ultimate results differ from the original or adjusted estimates of the Company, the effect will be recorded in Provision for income taxes.
The Provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which the Company operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. In the normal course of business the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Brazil, Canada, China, France, Germany, Ireland, Italy, Mexico, Spain, Switzerland, the Netherlands and the United States. In general, the examination of the Company’s material tax returns is complete or effectively settled for the years prior to 2008, with certain matters prior to 2008 being resolved through appeals and litigation.
The Company had certain deferred tax assets in Brazil, primarily comprised of net operating loss carryforwards, with a tax effected value of approximately $33 million at December 31, 2016. The operating results of the entities associated with these deferred tax assets have experienced declines in 2016 and 2015 due to market slowdowns in Brazil. The Company concluded that these deferred tax assets, which have an indefinite life, did not require a valuation allowance as of December 31, 2016 due to forecasted profitability and to-be implemented tax planning actions. In the second quarter of 2017, the Company updated its financial forecast and concluded that the forecasted operating results of these entities was further reduced due to weaker markets in Brazil during 2017. This additional negative evidence led the Company to conclude that it is more likely than not that the net deferred tax assets in Brazil will not be realized. As a result, the Company established a valuation allowance during the second quarter of 2017 of approximately $33 million.