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Income Taxes
6 Months Ended
Jan. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company recognized an income tax benefit of $1.9 million and an income tax expense of $48.1 million for the three months ended January 31, 2019 and 2018, respectively; and an income tax benefit of $5.2 million and an income tax expense of $26.0 million for the six months ended January 31, 2019 and 2018, respectively. The change in the amount of the provision for income taxes for each of the three and six months ended January 31, 2019 compared to the same period a year ago was primarily due to a one-time provisional net charge during the quarter ended January 31, 2018 from re-measuring deferred tax assets and liabilities as a result of the Tax Act. The effective tax rate of 167% and (497)% for the three and six months ended January 31, 2019, respectively, differs from the statutory U.S. federal income tax rate of 21% mainly due to permanent differences for stock-based compensation, including excess tax benefits, research and development credits, the tax rate differences between the United States and foreign countries, foreign withholding taxes, and certain non-deductible expenses including executive compensation.
During the three and six months ended January 31, 2019, unrecognized tax benefits increased by $0.3 million and $0.6 million, respectively. As of January 31, 2019, the Company had unrecognized tax benefits of $5.8 million that, if recognized, would affect the Company’s effective tax rate.
 
On December 22, 2017, the Tax Act was enacted into law which substantially changed U.S. tax law, including a reduction in the U.S. corporate income tax rate to 21% effective January 1, 2018 and several provisions that may impact the Company in current and future periods. The Tax Act includes a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries, a special deduction for foreign-derived intangible income, and a base erosion anti-abuse tax (“BEAT”) measure that taxes certain payments between a U.S. corporation and its foreign subsidiaries. These provisions of the Tax Act became effective for the Company beginning on August 1, 2018 and had no impact on the tax benefit for the six months ended January 31, 2019.

Under GAAP, the Company can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into its measurement of deferred taxes. The Company has elected the current period expense method.

In December 2018, the IRS issued proposed regulations related to the BEAT tax, which the Company is in the process of evaluating. If the proposed BEAT regulations are finalized in their current form, the impact may be material to the tax provision in the quarter of enactment.

The U.S. Treasury Department, the Internal Revenue Service (“IRS”), and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered. The Company continues to obtain, analyze, and interpret guidance as it is issued and will revise its estimates as additional information becomes available. Any legislative changes, including any other new or proposed U.S. Department of the Treasury regulations that have yet to be issued, may result in income tax adjustments, which could be material to our provision for income taxes and effective tax rate in the period any such changes are enacted. The Company has finalized its assessment of the transitional impacts of the Tax Act.