INCOME TAXES

The following table summarizes our effective tax rate and income tax expense (benefit) for the three and nine months ended September 30, 2016 and 2015 (in thousands except for percentages):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Effective tax rate	24		%	41		%	32		%	27		%
Income tax expense (benefit)	$	5,069		$	(14,130	)	$	3,725		$	9,513

For the three and nine months ended September 30, 2016, we recognized an income tax expense of $5.1 million and $3.7 million, respectively, representing an effective tax rate of 24% and 32%, respectively. The difference between the expected statutory federal tax rate of 35% and the effective tax rates for the three and nine months ended September 30, 2016, was primarily attributable to contingent consideration associated with Lumara Health, including the tax deductible portion of the anticipated payout, and federal research and development and orphan drug tax credits, partially offset by the impact of state income taxes, non-deductible stock compensation, and other non-deductible expenses. The effective tax rate for the nine months ended September 30, 2016, was also impacted by the impairment of the net intangible asset for the MuGard Rights and related contingent consideration fair value adjustment. We recorded a net tax benefit in the second quarter of 2016 for these discrete events at a combined federal and state statutory income tax rate of 39%.

For the three and nine months ended September 30, 2015, we recognized income tax benefit and expense of $14.1 million and $9.5 million, respectively, representing an effective tax rate of 41% and 27%, respectively. The difference between the expected statutory federal tax rate of 35% and the 41% effective tax rate for the three months ended September 30, 2015, was attributable to the impact of a valuation allowance release related to certain deferred tax assets and the impact of state income taxes, partially offset by non-deductible transaction costs associate with the acquisition of CBR and non-deductible contingent consideration expense associated with Lumara Health. The difference between the expected statutory federal tax rate of 35% and the 27% effective tax rate for the nine months ended September 30, 2015, was attributable to the impact of a valuation allowance release related to certain deferred tax assets, partially offset by the impact of state income taxes, non-deductible transaction costs associated with the acquisition of CBR, and non-deductible contingent consideration expense associated with Lumara Health.