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Income Taxes
6 Months Ended
Sep. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
During the second quarters of 2018 and 2017, income tax expense related to continuing operations was $122 million and $200 million and included net discrete tax expense of $1 million and net discrete tax benefit of $22 million. During the first six months of 2018 and 2017, income tax expense related to continuing operations was $217 million and $439 million and included net discrete tax expense of $4 million and net discrete tax benefit of $57 million. Our discrete tax benefits for the second quarter and first six months of 2017 included $9 million and $46 million related to the adoption of the amended accounting guidance on employee share-based compensation.
Our reported income tax rates for the second quarters of 2018 and 2017 were 68.5% and 38.1% and for the first six months of 2018 and 2017 were 34.1% and 30.5%. Fluctuations in our reported income tax rates are primarily due to the impact of nondeductible impairment charges as well as changes within our business mix of income, the effect of the intercompany sale of software and discrete items.
The non-cash pre-tax charge of $350 million to impair the carrying value of goodwill related to our McKesson Europe reporting unit within our Distribution Solutions segment, described in our Financial Note 3, “Goodwill Impairment Charges,” had an unfavorable impact on our effective tax rate in 2018 given that this charge was not tax deductible.
The non-cash pre-tax charge of $290 million to impair the carrying value of goodwill related to our EIS business within our Technology Solutions segment, described in Financial Note 3, "Goodwill Impairment Charges," had an unfavorable impact on our effective tax rate in 2017 given that approximately $269 million of the goodwill impairment charge was not tax deductible.
As of September 30, 2017, we had $564 million of unrecognized tax benefits, of which $419 million would reduce income tax expense and the effective tax rate, if recognized. During the next twelve months, it is reasonably possible that audit resolutions could potentially reduce our unrecognized tax benefits by up to $70 million. However, this amount may change as we continue to have ongoing negotiations with various taxing authorities throughout the year.
We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. We are subject to audit by the IRS for fiscal years 2010 through the current fiscal year. We are generally subject to audit by taxing authorities in various U.S. states and in foreign jurisdictions for fiscal years 2010 through the current fiscal year.