Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.10.0.1
Income Taxes
 6 Months Ended
Jun. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The components of income tax expense (benefit) attributable to the Company for the three and six months ended June 30, 2018 and 2017, are as follows (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Foreign current income tax expense
$
67,665

 
$
21

 
$
125,712

 
$
606

Foreign deferred income tax benefit
(15,266
)
 
(14
)
 
(25,386
)
 
(20
)
U.S. current income tax expense
1,636


—

 
1,624

 
—

U.S. deferred income tax benefit
(523
)

(2,811
)
 
(2,520
)
 
(6,496
)
Total
$
53,512

 
$
(2,804
)
 
$
99,430

 
$
(5,910
)


The Company's effective tax rate was 50% and 37%, respectively, for the six months ended June 30, 2018 and 2017. The increase in the effective tax rate is primarily due to the equity based compensation expense recognized during the six months ended June 30, 2018 as well as a higher tax rate in Puerto Rico, where most of our income was generated during the six months ended June 30, 2018, compared to the United States tax rate. No income was generated in Puerto Rico during the six months ended June 30, 2017. Additionally, the Company's effective tax rate can fluctuate as a result of, among other things, discrete items, state income taxes, permanent differences and changes in pre-tax income.

A valuation allowance for deferred tax assets is recognized when it is more likely than not that the benefit of deferred tax assets will not be realized. To assess that likelihood, the Company uses estimates and judgments regarding future taxable income, as well as the jurisdiction in which such taxable income is generated, to determine whether a valuation allowance is required. During the six months ended June 30, 2018, the Company recorded a change in valuation allowance of $9.2 million related to foreign tax credits that are not expected to be utilized.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Tax Act”). As a result, the Company recorded a provisional amount for effects of the Tax Act totaling $31.0 million during the fourth quarter of 2017. The Company continues to evaluate the impact of the Tax Act and no revisions were recorded to the provisional amount during the six months ended June 30, 2018. The Company expects to complete its detailed analysis of the effects of the Tax Act no later than the fourth quarter of 2018.