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Income Taxes | 12 Months Ended
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Sep. 30, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The domestic and foreign pretax income (loss) from continuing operations is as follows:
| Fiscal Year Ended September 30,
| 2022 |  | 2021 |  | 2020
| (in millions)
Domestic | $ | 385 |  |  | $ | 182 |  |  | $ | (655) |
Foreign | 355 |  |  | 274 |  |  | 208 |
Income (loss) before income taxes | $ | 740 |  |  | $ | 456 |  |  | $ | (447) |
Current and deferred income tax expense provided are as follows:
| Fiscal Year Ended September 30,
| 2022 |  | 2021 |  | 2020
| (in millions)
Federal: |  |  |  |  |
Current | $ | 23 |  |  | $ | 6 |  |  | $ | 3 |
Deferred | 44 |  |  | 31 |  |  | (28) |
Foreign: |  |  |  |  |
Current (a) | 128 |  |  | 107 |  |  | 74 |
Deferred | (30) |  |  | (5) |  |  | (28) |
U.S. State: |  |  |  |  |
Current | 21 |  |  | 9 |  |  | 3 |
Deferred | (1) |  |  | 1 |  |  | (1) |
Income tax expense | $ | 185 |  |  | $ | 149 |  |  | $ | 23 |
______________________________________ (a)Includes withholding taxes of $27 million, $26 million and $15 million for the fiscal years ended September 30, 2022, 2021 and 2020, respectively. The differences between the U.S. federal statutory income tax rate of 21.0% for each of the fiscal years ended September 30, 2022, 2021 and 2020 and income taxes provided are as follows:
| Fiscal Year Ended September 30,
| 2022 |  | 2021 |  | 2020
| (in millions)
Taxes on income at the U.S. federal statutory rate | $ | 155 |  |  | $ | 96 |  |  | $ | (94) |
U.S. state and local taxes | 15 |  |  | 10 |  |  | 2 |
Foreign income taxed at different rates, including withholding taxes | 25 |  |  | 34 |  |  | 10 |
Increase in valuation allowance | 2 |  |  | 2 |  |  | 1 |
Release of valuation allowance | (8) |  |  | (6) |  |  | (38) |
Change in tax rates | 1 |  |  | 10 |  |  | 4 |
Impact of GILTI and FDII | (6) |  |  | (4) |  |  | 2 |
IPO Costs | — |  |  | — |  |  | 22 |
Executive Compensation | 2 |  |  | 2 |  |  | 2 |
Non-deductible long term incentive plan | 4 |  |  | 3 |  |  | 112 |
Other | (5) |  |  | 2 |  |  | — |
Income tax expense | $ | 185 |  |  | $ | 149 |  |  | $ | 23 |
During the fiscal year ended September 30, 2022, the Company recognized a tax benefit of $8 million for the release of valuation allowances in various foreign jurisdictions. During the fiscal year ended September 30, 2021, the Company recognized $10 million of income tax expense arising from an increase in our net UK deferred tax liability due to the change in the UK future statutory tax rate, which was offset by $4 million of excess tax benefits from long term incentive plan, and $6 million for the release of valuation allowances in Mexico and various foreign jurisdictions. During the fiscal year ended September 30, 2020, the Company recognized a net U.S. tax benefit of $25 million primarily related to the release of a U.S. deferred tax valuation allowance of $33 million offset by a write-off of expiring foreign tax credits of $10 million and a tax benefit of $15 million for the release of valuation allowances in Japan and various foreign jurisdictions. For the fiscal years ended September 30, 2022 and September 30, 2021, the Company incurred losses in certain foreign territories and has offset the tax benefit associated with these losses with a valuation allowance as the Company has determined that it is more likely than not that these losses will not be utilized. Significant components of the Company’s net deferred tax liabilities are summarized below:
| September 30, 2022 |  | September 30, 2021 (a)
| (in millions)
Deferred tax assets: |  |  |
Allowance and reserves | $ | 27 |  |  | $ | 25 |
Employee benefits and compensation | 75 |  |  | 78 |
Other accruals | 27 |  |  | 28 |
Property, plant and equipment | 30 |  |  | 19 |
Operating lease liabilities | 66 |  |  | 77 |
Tax attribute carryforwards | 65 |  |  | 135 |
Deferred revenue and debt | 17 |  |  | 14 |
Total deferred tax assets | 307 |  |  | 376 |
Less: Valuation allowance | (29) |  |  | (38) |
Deferred tax assets, net of valuation allowance | 278 |  |  | 338 |
Deferred tax liabilities: |  |  |
Royalty advances | (24) |  |  | (19) |
Operating lease right-of-use assets | (52) |  |  | (63) |
Accrued royalties | (37) |  |  | (38) |
Intangible assets | (333) |  |  | (393) |
Debt and other | (23) |  |  | (1) |
Total deferred tax liabilities | (469) |  |  | (514) |
Net deferred tax liabilities | $ | (191) |  |  | $ | (176) |
______________________________________ (a)Prior year amounts were updated to reflect an immaterial correction of previous netting of certain deferred taxes. During the fiscal year ended September 30, 2022, the Company utilized a substantial portion of its foreign tax credit carryforwards in the U.S. The current levels of pre-tax income are sufficient to generate the minimum amount of future taxable income needed to support U.S. deferred tax assets realization. At September 30, 2022, the Company has no remaining U.S. federal tax net operating loss carryforwards. The Company also has tax net operating loss carryforwards, with no expiration date, in France and Spain of $40 million and $17 million, respectively, and other tax net operating loss carryforwards in state, local and foreign jurisdictions that expire in various periods. In addition, the Company has foreign tax credit carryforwards for U.S. tax purposes of $12 million. The U.S. foreign tax credits will begin to expire in fiscal year 2027. Deferred income taxes have not been recorded on indefinitely reinvested earnings of certain foreign subsidiaries of approximately $264 million at September 30, 2022. Distribution of these earnings may result in foreign withholding taxes and U.S. state taxes. However, variables existing if and when remittance occurs make it impracticable to estimate the amount of the ultimate tax liability, if any, on these accumulated foreign earnings. The Company classifies interest and penalties related to uncertain tax position as a component of income tax expense. As of September 30, 2022 and September 30, 2021, the Company had accrued $4 million and $4 million of interest and penalties, respectively. The following table reflects changes in the gross unrecognized tax benefits, including interest and penalties:
| Fiscal Year Ended September 30,
| 2022 |  | 2021 |  | 2020
| (in millions)
Gross unrecognized tax benefits - beginning of period | $ | 12 |  |  | $ | 12 |  |  | $ | 12 |
Additions for prior year tax positions | 1 |  |  | 3 |  |  | 3 |
Subtractions for prior year tax positions | (5) |  |  | (3) |  |  | (3) |
Gross unrecognized tax benefits - end of period | $ | 8 |  |  | $ | 12 |  |  | $ | 12 |
Included in the total unrecognized tax benefits at September 30, 2022 and September 30, 2021 are $7 million and $12 million, respectively, that if recognized, would reduce the effective income tax rate. The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of September 30, 2022 could decrease by up to approximately $1 million related to various ongoing audits and settlement discussions in various foreign jurisdictions during the next twelve months. The Company and its subsidiaries file income tax returns in the U.S. and various foreign jurisdictions. The Company has completed tax audits in the U.S. for tax years ended through September 30, 2013, in the UK for the tax years ended through September 30, 2016, in Germany for the tax years ended through September 30, 2014 and in France for the tax years ended through September 30, 2018. The Company is at various stages in the tax audit process in certain foreign and local jurisdictions.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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