INCOME TAXES

9 Months Ended

Sep. 30, 2017

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

The Company determines its periodic income tax benefit or expense based upon the current period income and the annual estimated tax rate for the Company adjusted for discrete items including changes to prior period estimates. The estimated tax rate is revised, if necessary, as of the end of each successive interim period during the fiscal year to the Company's current annual estimated tax rate.

For the three months ended September 30, 2017, the effective tax rate reflects an income tax provision of 41.7 percent compared to an income tax benefit of 30.8 percent for the comparable period in the prior year. For the nine months ended September 30, 2017, the effective tax rate reflects an income tax provision of 38.1 percent compared to an effective tax benefit rate of 41.9 percent for the comparable period in the prior year. The 2017 effective rate includes detrimental discrete adjustments related to state taxes and net operating losses, partially offset by a beneficial discrete adjustment resulting from the recently adopted provisions of ASU 2016-09 that requires excess tax benefits and deficiencies related to share based payment awards to be recognized as a component of income tax expense rather than stockholders’ equity. Accordingly, a net detrimental discrete adjustment of $1.1 million is reflected in the 2017 nine-month effective rate. The 2016 income tax benefit and associated benefit rate was the result of operational losses and the one-time beneficial impact of a resolution of a tax matter with a state taxing authority totaling $15.7 million, offset by the detrimental effect of non-deductible permanent items.