NOTE 10. INCOME TAX EXPENSE

On December 22, 2017, the U.S. federal government enacted the 2017 Tax Act, resulting in significant changes from existing U.S. tax laws that impact us, including, but not limited to, reducing the U.S. federal corporate income tax rate from 35% to 21%, allowing immediate 100% deduction for the cost of qualified property, eliminating the domestic production activities deduction, and imposing a one-time transition tax on the cumulative earnings and profits of certain foreign subsidiaries that were previously not repatriated and therefore not taxed for U.S. income tax purposes. Our federal income tax expense for periods beginning in 2018 will be based on the new rate.

In December 2017, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”), which addresses situations where the accounting is incomplete for the income tax effects of the 2017 Tax Act. SAB 118 directs registrants to consider the impact of the 2017 Tax Act as “provisional” when they do not have the necessary information available, prepared or analyzed (including computations) to finalize the accounting for the change in tax law. Registrants are provided a measurement period of up to one year to obtain, prepare, and analyze information necessary to finalize the accounting for provisional amounts.

During the fourth quarter of 2017, we recorded provisional amounts as a result of the 2017 Tax Act. These amounts are subject to change as we obtain information necessary to complete the calculations. For the three and six months ended June 30, 2018, there were no changes made to the provisional amounts recognized in 2017. We will continue to analyze the effects of the enactment of the 2017 Tax Act and recognize any changes to the provisional amounts as they are identified during the measurement period as provided for in SAB 118. The final impact of the 2017 Tax Act may differ from the provisional amounts that have been recognized due to, among other things, changes in our interpretation of the 2017 Tax Act, legislative or administrative actions to clarify the intent of the statutory language provided that differ from our current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the 2017 Tax Act, or any updates or changes to estimates utilized to calculate the impacts. We expect to complete our analysis of the provisional items during the second half of 2018.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Earnings from continuing operations before income taxes	$	65.3		$	68.6		$	114.7		$	125.9
Income tax expense		17.7			24.9			25.9			46.7
Effective tax rate		27.1	%		36.3	%		22.6	%		37.1	%

The effective tax rate for the second quarter was lower compared to the same period in 2017 due to the changes resulting from the 2017 Tax Act, primarily the reduction in the federal statutory tax rate from 35% to 21%. The effective tax rate for the first six months of 2018 was lower compared to the same period in 2017 due to changes resulting from the 2017 Tax Act, primarily the reduction in the federal statutory tax rate from 35% to 21%, as well as excess tax benefits from stock-based compensation.

It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. However, an estimate of the range of reasonably possible outcomes cannot be made. Changes to unrecognized tax benefits could result from the completion of ongoing examinations, the expiration of the statute of limitations or other unforeseen circumstances.