7. Income taxes

We recognized tax provisions of $0.8 million on pretax net income of $4.2 and $11.8 million during the three and nine months ended September 30, 2017, respectively. We recognized tax benefits of $11.8 and $9.0 million on pretax net income of $5.8 and $16.0 million during the three and nine months ended September 30, 2016, respectively. The provisions for income taxes before discrete items reflected in the table below were $1.9 and $4.5 million during the three and nine months ended September 30, 2017, respectively, and $3.3 and $6.1 million during the three and nine months ended September 30, 2016, respectively. The decrease in the provisions for income taxes before discrete items for the three and nine months ended September 30, 2017, compared with the same periods in the prior year, is primarily due to decreased profitability before income taxes.

Primary differences between our provision for income taxes before discrete items and the income tax provision at the U.S. statutory rate of 35% include lower taxes on permanently reinvested foreign earnings, the tax effects of stock-based compensation expense pursuant to ASC 718-740, Stock Compensation – Income Taxes, which are non-deductible for tax purposes, and tax benefits from significantly lower reversal of uncertain tax positions in 2017 as compared to those recorded in 2016.

Our tax provisions before discrete items are reconciled to our recorded benefits for income taxes during the three and nine months ended September 30, 2017 and 2016 as follows (in millions):


	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Provision for income taxes before discrete items	$	1.9		$	3.3		$	4.5		$	6.1
Interest related to unrecognized tax benefits		—			—			0.1			0.3
Reassessment of taxes upon filing tax returns		0.3			(0.2	)		0.4			(0.2	)
Provision (benefit) related to stock based compensation, including ESPP dispositions		0.4			(1.4	)		(1.9	)		(1.7	)
Benefit from reassessment of taxes upon foreign statutory tax rate change		—			—			(0.5	)		—
Benefit from reversals of uncertain tax positions due to statute of limitation expirations		(1.8	)		(13.5	)		(1.8	)		(13.5	)

Benefit from income taxes	$	0.8		$	(11.8	)	$	0.8		$	(9.0	)

As of September 30, 2017, and December 31, 2016, gross unrecognized benefits that would affect the effective tax rate if recognized were $32.3 and $32.0 million, respectively. Over the next twelve months, our existing tax positions will continue to generate increased liabilities for unrecognized tax benefits. It is reasonably possible that our gross unrecognized tax benefits will decrease up to $5.0 million in the next twelve months primarily due to the lapse of the statute of limitations for federal and state tax purposes. These adjustments, if recognized, would positively impact our effective tax rate, and would be recognized as additional tax benefits in our Condensed Consolidated Statements of Operations.

In accordance with ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, Similar Tax Loss, or Tax Credit Carryforward Exists, $19.9 million of gross unrecognized tax benefits were offset against deferred tax assets as of September 30, 2017, and the remaining $12.4 million has been recorded as noncurrent income taxes payable.

We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of September 30, 2017 and December 31, 2016, we have accrued $0.6 and $0.5 million, respectively, for potential payments of interest and penalties.

We are subject to examination by the Internal Revenue Service (“IRS”) for the 2014-2015 tax years, state tax jurisdictions for the 2012-2015 tax years, the Netherlands tax authority for the 2012-2015 tax years, the Spanish tax authority for the 2013-2016 tax years, the Israel tax authority for the 2011-2015 tax years, and the Italian tax authority for the 2012-2015 tax years.