## Table

|  |  | Year Ended December 31, |  |
|---|---|---|---|
|  | 2019 | 2018 | 2017 |
| Statutory federal income tax rate | 21.0 %      | 21.0 % | 35.0 % |
| Effect of:                        |  |  |  |
| State income tax, net of federal benefit      | 3.5 | 3.4 | 2.3 |
| State credit carryforwards      | 1.3 | 0.3 | (0.1 )  |
| U.S. federal R&D tax credit      | (1.9 )      | (1.7 )      | (0.8 )  |
| Tax Reform      | - | (0.1 )      | 1.5 |
| Excess benefit of equity compensation      | (0.1 )      | (0.6 )      | (1.0 )  |
| Foreign-derived intangible income (FDII)  |  |  |  |
| deduction      | (3.1 )      | (1.6 )      | - |
| Foreign operations      | 1.1 | 1.2 | (0.1 )  |
| Tax contingencies      | 3.7 | 0.5 | - |
| Other permanent differences      | 1.5 | 1.0 | 0.3 |
| Change in valuation allowance      | (0.9 )      | (0.2 )      | (0.1 )  |
| Income Tax | 26.1% | 23.2% | 37.0% |



## Text

We present below a summary of the items that cause recorded income taxes to differ from taxes computed using the statutory
federal income tax rate for the years ended December 31, 2019, 2018 and 2017:


On December 22, 2017, the United States enacted tax reform legislation commonly known as the Tax Cuts and Jobs Act (“the Act”), resulting in significant modifications to existing law. In December 2017, we recorded a provisional estimate of $3.3 million for the one-time deemed repatriation transition tax on unrepatriated foreign earnings. The provisional amount was based on information available at that time, including estimated tax earnings and profits from foreign investments. In the fourth quarter of 2018, we finalized our transition tax calculation and recorded additional tax expense of $0.3 million. In December 2017, we also recorded a provisional write-down to deferred tax assets of $0.7 million related to changes in Section 162(m), Internal Revenue Code of 1986, regarding deductions for excessive employee compensation. In 2018, we finalized our calculation under Section 162(m) and recorded a tax benefit of $0.5 million. We also recorded a one-time tax benefit in December 2017 of $1.2 million from the remeasurement of deferred tax assets and liabilities from 35% to 21%. As of December 31, 2018, we completed the accounting for all of the impacts of the Act. Act”), resulting in significant modifications to existing law. In December 2017, we recorded a provisional estimate of $3.3 million for the one-time deemed repatriation transition tax on unrepatriated foreign earnings. The provisional amount was based on information available at that time, including estimated tax earnings and profits from foreign investments. In the fourth quarter of 2018, we finalized our transition tax calculation and recorded additional tax expense of $0.3 million. In December 2017, we also recorded a provisional write-down to deferred tax assets of $0.7 million related to changes in Section 162(m), Internal Revenue Code of 1986, regarding deductions for excessive employee compensation. In 2018, we finalized our calculation under Section 162(m) and recorded a tax benefit of $0.5 million. We also recorded a one-time tax benefit in December 2017 of $1.2 million from the remeasurement of deferred tax assets and liabilities from 35% to 21%. As of December 31, 2018, we completed the accounting for all of the impacts of the Act.
Act”), resulting in significant modifications to existing law. In December 2017, we recorded a provisional estimate of $3.3 million for
the one-time deemed repatriation transition tax on unrepatriated foreign earnings. The provisional amount was based on information
available at that time, including estimated tax earnings and profits from foreign investments. In the fourth quarter of 2018, we
finalized our transition tax calculation and recorded additional tax expense of $0.3 million. In December 2017, we also recorded a
provisional write-down to deferred tax assets of $0.7 million related to changes in Section 162(m), Internal Revenue Code of 1986,
regarding deductions for excessive employee compensation. In 2018, we finalized our calculation under Section 162(m) and recorded
a tax benefit of $0.5 million. We also recorded a one-time tax benefit in December 2017 of $1.2 million from the remeasurement of
deferred tax assets and liabilities from 35% to 21%. As of December 31, 2018, we completed the accounting for all of the impacts of
the Act.


The Act provides for the global intangible low-taxed income (“GILTI”) provision which requires us in our U.S. income tax return, to include foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The FASB staff provided additional guidance to address the accounting for the effects of the provisions related to the taxation of GILTI, noting that companies should make an accounting policy election to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to include the tax expense in the year it is incurred. We have elected to include the tax expense in the year that we incur it.