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Income Taxes
9 Months Ended
Sep. 30, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The provision for income taxes was $21.4 million for the three months ended September 30, 2015 compared to $12.6 million in the three months ended September 30, 2014. The effective income tax rate was 41.4% for the three months ended September 30, 2015 and 27.1% for the same period in 2014. The quarter-over-quarter increase in the effective income tax rates was primarily due to decreases in foreign tax credit benefits, increases in non-deductible expenses relating to acquisitions, and an estimated greater percentage of 2015 pretax income being earned in higher tax countries.

The provision for income taxes was $65.7 million for the nine months ended September 30, 2015 compared to $57.8 million in the nine months ended September 30, 2014. The effective income tax rate was 37.4% for the nine months ended September 30, 2015 and 31.7% for the same period in 2014. The increase in the effective income tax rate was similarly due to decreases in foreign tax credit benefits, increases in non-deductible expenses relating to acquisitions, and an estimated greater percentage of 2015 pretax income being earned in higher tax countries.

As of September 30, 2015 and December 31, 2014, the Company had gross unrecognized tax benefits of $22.8 million and $20.6 million, respectively. It is reasonably possible that these gross unrecognized tax benefits will decrease by approximately $1.4 million within the next 12 months due to the anticipated closure of audits and the expiration of certain statutes of limitation. These unrecognized tax benefits relate primarily to the utilization of tax attributes, as well as certain other unrecognized tax positions, each of which are individually insignificant.

In the three months ended September 30, 2015, Gartner favorably settled a state income tax audit, freeing up certain tax credits which the Company had expected to utilize against its income tax liability. Because of the favorable settlement, credits would have expired unutilized, therefore the Company has sold credits to avoid this outcome. As a result, the tax provision for the three and nine months ended September 30, 2015 includes a benefit for the audit settlement offset by an expense for the reduction for the tax credits, and Other income (expense) includes a  pre-tax gain of $5.4 million for the sale of the credits. 

In July 2015, the United States Tax Court (the “Court”) issued an opinion relating to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement. In its opinion, the Court held that affiliated companies may exclude stock-based compensation expense from their cost-sharing arrangement. Because of uncertainty related to the final resolution of this litigation and the recognition of potential benefits to the Company, the Company has not recorded any financial benefit associated with this decision. The Company will monitor developments related to this case and the potential impact of those developments on the Company’s current and future financial statements.