Income Taxes

9 Months Ended

Sep. 30, 2022

Income Taxes [Abstract]

Income Taxes

Income Taxes

Our effective tax rate for the nine months ended September 30, 2022 increased period-over-period to 28.8% from 25.2%. The higher effective tax rate for 2022 was predominantly the result of the non-deductibility of the $113.4 million charges recorded in the first quarter of 2022, arising from the effects of the war in Ukraine, as well as a related additional net charge of $4.8 million. These charges were partially offset by the tax benefit arising from our share-based compensation awards. The effective tax rate for the nine months ended September 30, 2021 reflects a nominal tax applied to the book gain on the disposition of subsidiary resulting from the excess of tax over book basis and a reduction in income tax expense of $11.7 million primarily related to the favorable settlements of uncertain tax positions in certain jurisdictions.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. Historically, during the year we have made discretionary share repurchases. Beginning in 2023, these purchases would be subject to the excise tax. Based on the historical net repurchase activity the excise tax and the other provisions of the IRA are not expected to have a material impact on our results of operations or financial position. However, we are still in the process of analyzing the provisions of the IRA.

At September 30, 2022, our unrecognized tax benefits were $162.3 million. Of this amount, approximately $157.2 million would affect our effective tax rate upon resolution of the uncertain tax positions.