Income Taxes

3 Months Ended

Mar. 31, 2021

Tax Rate

The following table provides a comparative summary of our income tax expense and effective income tax rate for the three months ended March 31, 2021:


	Three months ended
	March 31,
	2021			2020
Income tax expense	$	113.4		$	106.0
Effective income tax rate	18.8		%	16.0		%

Income tax expense is attributable to the U.S. federal, state and foreign income taxes on our profitable operations. The increase in the effective tax rate for the three months ended March 31, 2021 as compared to the same period in the prior year is primarily attributable to the consolidation of Caelum during the first quarter 2021. Caelum's net loss included in our condensed consolidated statement of operations for the three months ended March 31, 2021 was $196.0, including acquired in-process research and development expense of $193.3, for which no tax benefit has been recognized. This resulted in an increase to the effective tax rate of 5.2% for the three months ended March 31, 2021.

In April 2020 we became aware of a European withholding tax regulation that could be interpreted to apply to certain of our previous intra-group transactions. We recorded an immaterial reserve related to this matter during the second quarter of 2020.

We have recorded tax on the undistributed earnings of our controlled foreign corporation (CFC) subsidiaries. To the extent CFC earnings may not be repatriated to the U.S. as a dividend distribution due to limitations imposed by law, we have not recorded the related potential withholding, foreign, local, and U.S. state income taxes.

We continue to maintain a valuation allowance when it is more likely than not that all or a portion of certain deferred tax assets will not be realized.