Note N: Income Taxes



The Company’s effective income tax rate was 23.8% and 34.8% for the three months ended November 30, 2018 and November 30, 2017, respectively, and 24.1% and 34.4% for the six months ended November 30, 2018 and November 30, 2017, respectively.  The decrease in the effective income tax rate for the three and six months ended November 30, 2018 was primarily due to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017. The decrease in the effective income tax rate for the six months ended November 30, 2018 was partially impacted by certain discrete items related to the revaluation of deferred taxes.  In addition, the effective income tax rates in these 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 November 30, 2018 by less than $0.01 per diluted share and the three months ended November 30, 2017 by $0.01 per diluted share.  The net discrete tax benefit impacted the six months ended November 30, 2018 and November 30, 2017 by $0.01 per diluted share and $0.02 per diluted share, respectively.



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. As of November 30, 2018, the Company’s accounting for the impact of the Tax Act is complete.