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INCOME TAXES | 12 Months Ended
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Sep. 30, 2017
INCOME TAXES |
INCOME TAXES | NOTE 5 INCOME TAXES The components of the provision (benefit) for income taxes are as follows:
|  | Year Ended September 30, |
|  | 2017 |  | 2016 |  | 2015 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (36,260) |  | $ | (86,010) |  | $ | 84,229 |
Foreign |  |  | 4,108 |  |  | 9,987 |  |  | 14,864 |
State |  |  | (472) |  |  | (3,742) |  |  | 10,881 |
|  |  | (32,624) |  |  | (79,765) |  |  | 109,974 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | (14,953) |  |  | 58,136 |  |  | 165,491 |
Foreign |  |  | (7,827) |  |  | 408 |  |  | (34,410) |
State |  |  | (1,331) |  |  | 1,544 |  |  | 350 |
|  |  | (24,111) |  |  | 60,088 |  |  | 131,431 |
Total provision (benefit) |  | $ | (56,735) |  | $ | (19,677) |  | $ | 241,405 |
The amounts of domestic and foreign income (loss) before income taxes are as follows:
|  | Years Ended September 30, |
|  | 2017 |  | 2016 |  | 2015 |
|  | (in thousands) |
Domestic |  | $ | (173,157) |  | $ | (49,636) |  | $ | 675,425 |
Foreign |  |  | (11,441) |  |  | (23,031) |  |  | (13,546) |
|  | $ | (184,598) |  | $ | (72,667) |  | $ | 661,879 |
Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. Recoverability of any tax assets are evaluated and necessary allowances are provided. The carrying value of the net deferred tax assets is based on management’s judgments using certain estimates and assumptions that we will be able to generate sufficient future taxable income in certain tax jurisdictions to realize the benefits of such assets. If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future. The components of our net deferred tax liabilities are as follows:
|  | September 30, |
|  | 2017 |  | 2016 |
|  | (in thousands) |
Deferred tax liabilities: |  |  |  |  |  |  |
Property, plant and equipment |  | $ | 1,386,512 |  | $ | 1,411,139 |
Available-for-sale securities |  |  | 24,940 |  |  | 25,470 |
Other |  |  | 21,609 |  |  | 2,326 |
Total deferred tax liabilities |  |  | 1,433,061 |  |  | 1,438,935 |
Deferred tax assets: |  |  |  |  |  |  |
Pension reserves |  |  | 7,614 |  |  | 8,330 |
Self-insurance reserves |  |  | 19,461 |  |  | 15,282 |
Net operating loss, foreign tax credit, and other federal tax credit carryforwards |  |  | 62,478 |  |  | 71,778 |
Financial accruals |  |  | 62,971 |  |  | 67,594 |
Other |  |  | 6,003 |  |  | 4,952 |
Total deferred tax assets |  |  | 158,527 |  |  | 167,936 |
Valuation allowance |  |  | (58,155) |  |  | (71,457) |
Net deferred tax assets |  |  | 100,372 |  |  | 96,479 |
Net deferred tax liabilities |  | $ | 1,332,689 |  | $ | 1,342,456 |
The change in our net deferred tax assets and liabilities is impacted by foreign currency remeasurement. As of September 30, 2017, we had federal, state and foreign net operating loss carryforwards for income tax purposes of $12.6 million, $29.9 million and $77.8 million, respectively, and foreign tax credit carryforwards of approximately $34.9 million (of which $30.2 million is reflected as a deferred tax asset in our Consolidated Financial Statements prior to consideration of our valuation allowance) which will expire in fiscal 2018 through 2037. The valuation allowance is primarily attributable to state and foreign net operating loss carryforwards of $2.0 million and $25.4 million, respectively, and foreign tax credit carryforwards of $30.2 million, and foreign minimum tax credit carryforwards of $0.6 million which more likely than not will not be utilized. The federal net operating loss carryforward of $12.6 million and other federal tax credit carryforward of $0.3 million resulted from the acquisition of MOTIVE, which closed during the third quarter of fiscal 2017. The acquisition represented an ownership change under Internal Revenue Code Section 382 for which both are subject to an annual limitation. Both tax attributes begin to expire in 2034 and it is more likely than not both will be utilized. For the fiscal year ended September 30, 2017, the Company is estimating a federal net operating loss for income tax purposes of approximately $125.1 million. At this time, the Company is anticipating carrying back the federal net operating loss to the fiscal year ended September 30, 2015 and has recorded an estimated income tax receivable of $39.8 million. The Company has until the filing of the federal income tax return for the fiscal year ended September 30, 2017 to decide whether to carryback or carryforward the net operating loss. Effective income tax rates as compared to the U.S. Federal income tax rate are as follows:
|  | Year Ended September 30, |
|  | 2017 |  | 2016 |  | 2015 |
U.S. Federal income tax rate |  | 35.0 | % | 35.0 | % | 35.0 | %
Effect of foreign taxes |  | 1.8 |  | (13.8) |  | (3.2) |
State income taxes, net of federal tax benefit |  | 0.6 |  | 3.2 |  | 0.8 |
U.S. domestic production activities |  | (2.1) |  | (10.4) |  | (1.2) |
Other impact of foreign operations |  | (2.9) |  | 14.7 |  | 4.5 |
Other |  | (1.7) |  | (1.6) |  | 0.6 |
Effective income tax rate |  | 30.7 | % | 27.1 | % | 36.5 | %
Effective tax rates differ from the U.S. federal statutory rate of 35.0 percent primarily due to state and foreign income taxes. The effective tax rate for the twelve months ended September 30, 2017 was also impacted by a reduction to the benefit of the carryback of the federal net operating loss generated in the fiscal year ended September 30, 2017 resulting from the reduction of the Internal Revenue Code Section 199 deduction in the carryback year. We recognize accrued interest related to unrecognized tax benefits in interest expense, and penalties in other expense in the Consolidated Statements of Operations. As of September 30, 2017 and 2016, we had accrued interest and penalties of $2.8 million and $6.8 million, respectively. A reconciliation of the change in our gross unrecognized tax benefits for the fiscal years ended September 30, 2017 and 2016 is as follows:
|  | September 30, |
|  | 2017 |  | 2016 |
|  | (in thousands) |
Unrecognized tax benefits at October 1, |  | $ | 9,551 |  | $ | 11,211 |
Gross decreases - tax positions in prior periods |  |  | (1) |  |  | — |
Gross decreases - current period effect of tax positions |  |  | (170) |  |  | (1,173) |
Gross increases - current period effect of tax positions |  |  | 300 |  |  | 969 |
Expiration of statute of limitations for assessments |  |  | (4,907) |  |  | (679) |
Settlements |  |  | — |  |  | (777) |
Unrecognized tax benefits at September 30, |  | $ | 4,773 |  | $ | 9,551 |
As of September 30, 2017 and 2016, our liability for unrecognized tax benefits includes $3.7 million and $3.8 million, respectively, of unrecognized tax benefits related to discontinued operations that, if recognized, would not affect the effective tax rate. The remaining unrecognized tax benefits would affect the effective tax rate if recognized. The liabilities for unrecognized tax benefits and related interest and penalties are included in other noncurrent liabilities in our Consolidated Balance Sheets. For the next 12 months, we cannot predict with certainty whether we will achieve ultimate resolution of any uncertain tax position associated with our U.S. and international operations that could result in increases or decreases of our unrecognized tax benefits. However, we do not expect the increases or decreases to have a material effect on our results of operations or financial position. We file a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions. The tax years that remain open to examination by U.S. federal and state jurisdictions include fiscal 2013 through 2016, with exception of certain state jurisdictions currently under audit. The tax years remaining open to examination by foreign jurisdictions include 2003 through 2017.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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