INCOME TAXES

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

The effective tax rate for the three and nine months ended September 30, 2022 was 26.3% and 24.0%, respectively. The effective tax rate for the three and nine months ended September 30, 2021 was 27.2% and 22.0%, respectively. Wesco’s effective tax rate typically differs from the federal statutory income tax rate due to the tax effect of intercompany financing, foreign tax rate differences, the U.S. taxes imposed on foreign income, nondeductible expenses and state income taxes. For the three months ended September 30, 2022 and 2021, the effective tax rate reflects discrete income tax benefits of $3.2 million and $3.3 million, respectively, resulting from the exercise and vesting of stock-based awards. These discrete income tax benefits were offset by discrete income tax expense of $0.8 million and $4.2 million, respectively, resulting from return-to-provision adjustments. The net impact of discrete income tax items was a reduction to the estimated annual effective tax rate of approximately 0.7 percentage points for the three months ended September 30, 2022 and an increase of 0.7 percentage points for the three months ended September 30, 2021. For the nine months ended September 30, 2022 and 2021, the effective tax rate reflects discrete income tax benefits of $13.4 million and $8.3 million, respectively, resulting from reductions to the valuation allowance recorded against foreign tax credit carryforwards, as well as the exercise and vesting of stock-based awards of $9.4 million and $7.8 million, respectively. These discrete income tax benefits were partially offset by discrete income tax expense of $0.8 million and $4.2 million, respectively, resulting from return-to-provision adjustments. The net impact of discrete income tax items was a reduction to the estimated annual effective tax rate in such periods of approximately 2.6 and 3.1 percentage points, respectively.

There have been no material adjustments to liabilities for uncertain tax positions since December 31, 2021.