Income Taxes |
9 Months Ended |
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Sep. 30, 2018 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Income Taxes
We file a consolidated federal income tax return for all of our wholly-owned subsidiaries, including Sirius XM. For the three months ended September 30, 2018 and 2017, income tax expense was $11,525 and $108,901, respectively, and $162,344 and $342,387 for the nine months ended September 30, 2018 and 2017, respectively.
Our effective tax rate for the three months ended September 30, 2018 and 2017 was 3.3% and 28.3%, respectively. Our effective tax rate for the nine months ended September 30, 2018 and 2017 was 14.9% and 33.3%, respectively. The effective tax rate for the three and nine months ended September 30, 2018 was primarily impacted by the reduced federal income tax rate as a result of the Tax Cut and Jobs Act (the "Tax Act"), the recognition of excess tax benefits related to share based compensation and a benefit related to state research and development credits. The effective tax rate for the three and nine months ended September 30, 2017 was impacted by the recognition of excess tax benefits related to share based compensation and a benefit related to a federal tax credit under the Protecting Americans from Tax Hikes Act of 2015 for research and development activities. We estimate our effective tax rate for the year ending December 31, 2018 will be approximately 17%.
Our accounting for the federal rate reduction under the Tax Act is complete. The Tax Act has significant complexity and implementation guidance from the Internal Revenue Service and clarifications of state tax law, among other things, could impact our accounting for provisions of the Tax Act other than the federal rate reduction within the measurement period as defined in the SEC's Staff Accounting Bulletin No. 118 ("SAB 118"). As such, any resulting potential adjustments within the measurement period remain open under SAB 118. We do not believe potential adjustments in future periods will materially impact our financial condition or results of operations.
As of September 30, 2018 and December 31, 2017, we had a valuation allowance related to deferred tax assets of $65,878 and $52,883, respectively, that were not likely to be realized due to certain net operating loss limitations, including tax credits, and acquired net operating losses that were not more likely than not going to be utilized.
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