|9 Months Ended|
Sep. 26, 2020
|Income Tax Disclosure [Abstract]|
|INCOME TAXES||INCOME TAXES
The effective income tax rate for the nine months ended September 2020 was (7.2)% compared to 25.7% in the 2019 period. The nine months ended September 2020 included a net discrete tax benefit of $6.8 million, primarily comprised of $6.3 million of tax benefit recognized due to the enactment of Swiss tax reform in the canton of Ticino and $0.7 million of tax benefit related to the finalization of U.S. federal, state and foreign tax return filings. The $6.8 million net discrete tax benefit in the nine months ended September 2020 decreased the effective income tax rate by 29.2%.
During the three months ended September 2019, the Company recorded a $32.6 million non-cash impairment charge related to the Rock & Republic® trademark intangible asset which resulted in a tax benefit of $7.4 million.
The effective tax rate for the nine months ended September 2019 included a net discrete tax expense of $1.1 million, primarily comprised of $4.5 million of net tax expense related to unrecognized tax benefits and interest and $3.4 million of tax benefit related to stock compensation. The $1.1 million net discrete tax expense in the nine months ended September 2019 increased the effective income tax rate by 1.2%.
The effective income tax rate without discrete items for the nine months ended September 2020 was 22.0% compared to 24.5% in the 2019 period. The reduction was primarily due to a higher percentage of income in lower tax rate jurisdictions and a reduction in losses incurred for which no related tax benefit was recognized.
The Company files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. As of September 2020, the Company had not ﬁled its initial consolidated U.S. federal income tax return and thus had no tax years subject to IRS examinations. However, the Company is currently subject to examination by various U.S. state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that the Company's provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on the Company’s financial statements.
During the nine months ended September 2020, the amount of net unrecognized tax benefits and associated interest increased by $0.5 million to $14.8 million. Management also believes that it is reasonably possible that the amount of unrecognized tax benefits may decrease by $0.9 million within the next 12 fiscal months due to settlement of audits and expiration of statutes of limitations, $0.7 million of which would reduce income tax expense.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef