NOTE 13. INCOME TAXES

Our forecasted annual effective tax rate (“ETR”) at September 30, 2019 was 16.5%, as compared to 17.5% at September 30, 2018. This decrease was primarily due to changes in permanent book-to-tax differences for the nine months ended September 30, 2019.

For the nine months ended September 30, 2019 and 2018, our ETR was 0.8% and 17.5%, respectively. The following discrete items during nine months ended September 30, 2019 caused the year-to-date effective tax rate to be significantly different from our historical ETR: (i) we recorded an income tax benefit of approximately $150,000 as a result of a prior period change in estimate related to the foreign-derived intangible income (“FDII”) special deduction under Section 250 of the Internal Revenue Code, which reduced the ETR by 7.1% and (ii) we recorded an income tax benefit of approximately $180,000 as a result of tax benefits related to non-qualified stock options exercised during the period, which reduced the ETR by 8.5%.