Income Tax |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Income Tax | |
| Income Tax | 10. Income Tax The Company’s quarterly income tax provision is calculated using an estimated annual effective income tax rate (“ETR”) based on historical information and forward-looking estimates. The Company’s estimated annual ETR may fluctuate as a result of changes in items such as forecasted annual pre-tax income, changes to forecasted permanent book-to-tax differences (e.g., non-deductible expenses), and applicable statutory tax rates. The Company’s ETR for a particular reporting period may fluctuate from prior periods as a result of changes to the valuation allowance for net deferred tax assets, the impact of anticipated tax settlements with federal, state, or foreign tax authorities, the impact of tax law changes, and the impact of certain discrete events. The Company identifies items that are unusual and non-recurring in nature and treats these as discrete events. The tax effect of these discrete events is booked entirely in the quarter in which they occur. During the three and six months ended June 30, 2026, the Company recorded an income tax provision of $9.0 million and $16.8 million, respectively, resulting in ETRs of 41.0% and 46.5%, which include the effects of various permanent book-to-tax adjustments, foreign tax rate differences, U.S. tax on foreign operations, and U.S. state and local taxes. During the three and six months ended June 30, 2025, the Company recorded an income tax provision of $6.5 million and $13.6 million, respectively, resulting in ETRs of 42.5% and 55.1%, which include the effects of various permanent book-to-tax adjustments, foreign tax rate differences, U.S. tax on foreign operations, and U.S. state and local taxes. A valuation allowance has been established against certain U.S. tax loss carryforwards. All other net deferred tax assets have been determined to be more likely than not realizable. The Company regularly reviews its deferred tax assets for recoverability and would establish a valuation allowance if it believed that such assets may not be recovered, taking into consideration historical operating results, expectations of future earnings, changes in its operations, and the expected timing of the reversals of existing temporary differences. The Company accounts for uncertainty in income taxes utilizing ASC 740-10, “Income Taxes.” ASC 740-10 clarifies whether or not to recognize assets or liabilities for tax positions taken that may be challenged by a tax authority. It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosures. The application of ASC 740-10 requires judgment related to the uncertainty in income taxes and could impact the Company’s effective tax rate. |