Income Taxes

The provision for income taxes results in effective tax rates that differ from the statutory rates. The following is a reconciliation between the statutory U.S. federal income tax rate and the Company’s effective income tax rate on income before income taxes:



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Statutory rate	35.0	%	35.0	%	35.0	%	35.0	%
State taxes	1.2		1.2		1.1		1.2
Domestic production activities deduction	—		(1.8	)	—		(1.9	)
Noncontrolling interest in partially-owned subsidiaries	(1.0	)	(0.9	)	(1.1	)	(0.9	)
Other, net	(0.1	)	0.3		0.5		0.3
Effective rate	35.1	%	33.8	%	35.5	%	33.7	%

Our effective tax rate reflects the Company's estimate for 2016 of its state income tax expense and income attributable to the noncontrolling interests in partially-owned leasing subsidiaries for which no income tax expense is provided. See Note 5 Partially-Owned Leasing Subsidiaries for a further explanation of activities with respect to our partially-owned leasing subsidiaries.

Taxing authority examinations

The Internal Revenue Service ("IRS") field work for our 2006-2008 audit cycle and our 2009-2011 audit cycle have concluded and all issues have been agreed upon by us and the IRS. The previously disclosed issues that were a part of the mutual agreement process ("MAP") have been agreed upon. As the cycles included years in which tax refunds were issued to us, the Joint Committee on Taxation ("JCT") is required to review the final revenue agent report before the issues are effectively settled. Formal submission of the final revenue agent report to the JCT is expected by September 30, 2016. For this reason, we cannot determine when the 2006-2008 or the 2009-2011 cycle will close and all issues formally settled.

We have various subsidiaries in Mexico that file separate tax returns and are subject to examination by taxing authorities at different times. The 2007 tax year of one of our Mexican subsidiaries is still under review for transfer pricing purposes only, and its statute of limitations remains open through the later of the resolution of the MAP or July 2018. The remaining entities are generally open for their 2010 tax years and forward.

Unrecognized tax benefits

The change in unrecognized tax benefits for the six months ended June 30, 2016 and 2015 was as follows:



	Six Months Ended June 30,
	2016			2015
	(in millions)
Beginning balance	$	65.2		$	62.3
Additions for tax positions related to the current year	3.0			2.7
Additions for tax positions of prior years	1.0			—
Reductions for tax positions of prior years	(0.1		)	(0.1		)
Settlements	—			(0.2		)
Ending balance	$	69.1		$	64.7

Additions for tax positions related to the current year in the amounts of $3.0 million and $2.7 million recorded in the six months ended June 30, 2016 and 2015, respectively, were amounts provided for tax positions that will be taken for federal and state income tax purposes when we file those tax returns. Additions for tax positions related to prior years of $1.0 million recorded in the six months ended June 30, 2016 are due to a state filing position. The reductions in tax positions of prior years of $0.1 million for the six months ended June 30, 2016 and 2015 were primarily related to changes in state taxes. Settlements during the six months ended June 30, 2015 were due to a state tax position effectively settled upon audit and a settlement of an audit of one of our Mexican companies.

The total amount of unrecognized tax benefits including interest and penalties at June 30, 2016 and 2015, that would affect the Company’s overall effective tax rate if recognized was $15.2 million and $15.3 million, respectively. There is a reasonable possibility that unrecognized federal and state tax benefits will decrease by $4.2 million by December 31, 2016, due to settlements and lapses in statutes of limitations for assessing tax. We have entered into an agreement with the IRS to extend the statute of limitations to assess tax on our 2006-2011 tax years to account for the JCT review and expect these years to close by December 31, 2017.

Trinity accounts for interest expense and penalties related to income tax issues as income tax expense. Accordingly, interest expense and penalties associated with an uncertain tax position are included in the income tax provision. The total amount of accrued interest and penalties as of June 30, 2016 and December 31, 2015 was $13.3 million and $12.4 million, respectively. Income tax expense included an increase of $0.4 million and $0.9 million in interest expense and penalties related to uncertain tax positions for the three and six months ended June 30, 2016, respectively. Income tax expense included an increase of $0.3 million and $0.5 million in interest expense and penalties related to uncertain tax positions for the three and six months ended June 30, 2015, respectively.