|3 Months Ended|
Aug. 31, 2018
|Income Taxes [Abstract]|
Note N: Income Taxes
The Company’s effective income tax rate was 24.5% and 34.1% for the three months ended August 31, 2018 and August 31, 2017, respectively. The decrease in the effective income tax rate for the three months ended August 31, 2018 was primarily due to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017, partially offset by certain discrete items related to the revaluation of deferred taxes. In addition, the effective income tax rates in both periods were impacted by the recognition of a net discrete tax benefit related to employee stock-based compensation payments. The net discrete tax benefit impacted the three months ended August 31, 2018 and August 31, 2017 by $0.01 per diluted share for each respective period.
The Tax Act made broad and complex changes to U.S. Federal corporate income taxation as outlined in the Company’s Form 10-K for fiscal 2018. In December 2017, the staff of the SEC issued guidance under Staff Accounting Bulletin No. 118 (“SAB No. 118”), “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” allowing taxpayers to record provisional amounts for reasonable estimates when they do not have the necessary information available, prepared or analyzed in reasonable detail to complete their accounting for certain income tax effects of the Tax Act. The SEC also issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the related tax impacts. This analysis is complete except for provisional amounts that were determined in accordance with SAB No. 118 related to certain equity compensation agreements. However, any changes as a result of further guidance related to this topic are not expected to have a material impact on the provisional amounts.
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://fasb.org/us-gaap/role/ref/legacyRef