Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

Note 7. Income Taxes

In the three months ended September 30, 2021, we recognized deferred tax liabilities in connection with the acquisition of Novomer as discussed in Note 2, leading to an increase in goodwill. Prior to the acquisition, we had recorded a full valuation allowance against our deferred tax assets because we did not expect that we would be able to realize their value. We believe that we will be able to realize the value of some of these deferred tax assets by offsetting them against the new deferred tax liabilities from the Novomer acquisition, and as a result, we have recorded a discrete income tax benefit of $11.4 million.

As a result of recording this discrete income tax benefit, our reported effective income tax rates were 317.5% and 19.3% for the three and nine months ended September 30, 2021, respectively, which differ from the statutory rate of 21% due to the acquisition-related valuation allowance change. Because we reported losses before income tax in each period presented, we continued to provide a valuation allowance against our net deferred tax assets except as noted above.

In our assessment of the realizability of deferred tax assets, we considered whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized, using all available evidence, positive and negative, affecting specific deferred tax assets, including the scheduled reversal of deferred income tax liabilities, projected future taxable income, the length of carry-back and carry-forward periods, and tax planning strategies.