Income Taxes

A reconciliation of the income tax provision (benefit) based on the U.S. federal statutory rate of 35% to the effective income tax rate is as follows:



	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30						SEPTEMBER 30
	2017			2016			2017			2016
Income (loss) before income tax provision (benefit)	$	5,956		$	(13,721	)	$	23,347		$	(6,398	)
Statutory taxes (benefit) at 35.0%	$	2,085		$	(4,802	)	$	8,171		$	(2,239	)
Percentage depletion	(1,033		)	(7,889		)	(5,531		)	(12,034		)
State and local income taxes	119			(758		)	187			(788		)
Domestic production deduction	(75		)	(628		)	(371		)	(666		)
Non-deductible expenses	(469		)	991			168			1,701
Valuation allowances	1,923			1,673			1,692			1,690
Uncertain tax positions	7			190			55			(2,015		)
Other, net	68			(366		)	193			381
Income tax provision (benefit)	$	2,625		$	(11,589	)	$	4,564		$	(13,970	)
Effective income tax rate	44.1		%	84.5		%	19.5		%	218.3		%

The effective income tax rates for the three and nine months ended September 30, 2017 include discrete income tax expense of $1.9 million and $1.6 million, respectively, primarily due to the establishment of a valuation allowance on deferred tax assets. The valuation allowance was established because the Company expects to be subject to Alternative Minimum Tax ("AMT") beginning in 2018 due to the change in the mix of earnings as a result of the spin-off of Hamilton Beach Holding. As a result of being subject to AMT beginning in 2018, the Company remeasured its deferred tax assets and liabilities using the AMT rate that is expected to apply to taxable income in future years in which those tax assets and liabilities are expected to be realized or settled.