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Income Taxes | 12 Months Ended
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Sep. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Note 6 — Income Taxes Income before income taxes comprises the following:
| 2017 |  | 2016 |  | 2015
Domestic | $ | 527.3 |  |  | $ | 518.9 |  |  | $ | 552.3 |
Foreign | 174.1 |  |  | 191.1 |  |  | 39.5 |
Total income before income taxes | $ | 701.4 |  |  | $ | 710.0 |  |  | $ | 591.8 |
The provisions for income taxes consist of the following:
| 2017 |  | 2016 |  | 2015
Current expense (benefit): |  |  |  |  |
Federal | $ | (2.7 | ) |  | $ | 44.2 |  |  | $ | 97.1 |
State | 14.0 |  |  | 20.9 |  |  | 32.2 |
Foreign | 56.2 |  |  | 78.7 |  |  | 36.0 |
Investment tax credit | — |  |  | — |  |  | (1.2 | )
Total current expense | 67.5 |  |  | 143.8 |  |  | 164.1 |
Deferred expense (benefit): |  |  |  |  |
Federal | 125.8 |  |  | 81.2 |  |  | 28.1 |
State | 16.4 |  |  | 1.3 |  |  | 2.9 |
Foreign | (31.8 | ) |  | (4.8 | ) |  | (17.0 | )
Investment tax credit amortization | (0.3 | ) |  | (0.3 | ) |  | (0.3 | )
Total deferred expense | 110.1 |  |  | 77.4 |  |  | 13.7 |
Total income tax expense | $ | 177.6 |  |  | $ | 221.2 |  |  | $ | 177.8 |
Federal income taxes for Fiscal 2017, Fiscal 2016 and Fiscal 2015 are net of foreign tax credits of $40.9, $25.6 and $63.0, respectively. A reconciliation from the U.S. federal statutory tax rate to our effective tax rate is as follows:
| 2017 |  | 2016 |  | 2015
U.S. federal statutory tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Difference in tax rate due to: |  |  |  |  |
Noncontrolling interests not subject to tax | (4.3 | ) |  | (6.2 | ) |  | (7.9 | )
State income taxes, net of federal benefit | 2.9 |  |  | 3.0 |  |  | 3.3 |
Valuation allowance adjustments | (1.1 | ) |  | (0.9 | ) |  | 0.8 |
Effects of foreign operations | (1.1 | ) |  | 0.6 |  |  | 0.2 |
Deferred tax effects of French tax rate change | (4.1 | ) |  | — |  |  | — |
Excess tax benefits on share-based payments | (1.3 | ) |  | — |  |  | — |
Other, net | (0.7 | ) |  | (0.3 | ) |  | (1.4 | )
Effective tax rate | 25.3 | % |  | 31.2 | % |  | 30.0 | %
Earnings of the Company’s foreign subsidiaries are generally subject to U.S. taxation upon repatriation to the U.S. and the Company’s tax provisions reflect the related incremental U.S. tax except for certain foreign subsidiaries whose unremitted earnings are considered to be indefinitely reinvested. At September 30, 2017, unremitted earnings of foreign subsidiaries of approximately $119.7 were deemed to be indefinitely reinvested. No deferred tax liability has been recognized with regard to the remittance of such earnings. Because of the availability of U.S. foreign tax credits, it is likely no U.S. tax would be due if such earnings were repatriated. Pennsylvania utility ratemaking practice permits the flow through to ratepayers of state tax benefits resulting from accelerated tax depreciation. For Fiscal 2017, Fiscal 2016 and Fiscal 2015, the beneficial effects of state tax flow through of accelerated depreciation reduced income tax expense by $2.5, $1.3 and $1.5, respectively. Deferred tax liabilities (assets) comprise the following at September 30:
| 2017 |  | 2016
Excess book basis over tax basis of property, plant and equipment | $ | 975.8 |  |  | $ | 873.9 |
Investment in AmeriGas Partners | 326.8 |  |  | 323.2 |
Intangible assets and goodwill | 98.2 |  |  | 87.1 |
Utility regulatory assets | 132.2 |  |  | 148.3 |
Other | 11.7 |  |  | 11.9 |
Gross deferred tax liabilities | 1,544.7 |  |  | 1,444.4 |
Pension plan liabilities | (57.7 | ) |  | (79.7 | )
Employee-related benefits | (65.4 | ) |  | (63.1 | )
Operating loss carryforwards | (30.9 | ) |  | (31.5 | )
Foreign tax credit carryforwards | (106.1 | ) |  | (105.1 | )
Utility regulatory liabilities | (9.3 | ) |  | (13.9 | )
Derivative instruments | (1.7 | ) |  | (14.7 | )
Utility environmental liabilities | (22.2 | ) |  | (22.8 | )
Other | (27.8 | ) |  | (28.3 | )
Gross deferred tax assets | (321.1 | ) |  | (359.1 | )
Deferred tax assets valuation allowance | 107.1 |  |  | 114.3 |
Net deferred tax liabilities | $ | 1,330.7 |  |  | $ | 1,199.6 |
In December 2016, the French Parliament approved the Finance Bill for 2017 and amended the Finance Bill for 2016 (collectively the “Finance Bills”). The Finance Bills, among other things, will reduce the French corporate income tax rate from the current 34.43% to 28.92%, effective for fiscal years starting after January 1, 2020 (Fiscal 2021). As a result of the future income tax rate reduction, during Fiscal 2017 the Company reduced its net deferred income tax labilities and recognized a deferred tax benefit of $29.0. At September 30, 2017, foreign net operating loss carryforwards principally relating to Flaga, UGI International Holdings BV and certain subsidiaries of France SAS totaled $24.5, $2.5 and $22.6, respectively, with no expiration dates. We have state net operating loss carryforwards primarily relating to certain subsidiaries which approximate $187.9 and expire through 2037. We also have operating loss carryforwards of $19.7 for certain operations of AmeriGas Propane that expire through 2037. At September 30, 2017, deferred tax assets relating to operating loss carryforwards include $5.6 for Flaga, $7.8 for certain subsidiaries of France SAS, $0.7 for UGI International Holdings BV, $6.8 for AmeriGas Propane and $10.0 for certain other subsidiaries. The valuation allowance for all deferred tax assets decreased by $7.2 in Fiscal 2017 due to the reversal of $7.6 of valuation allowances associated with future utilization of foreign tax credits and a decrease in foreign operating loss carryforwards of $1.5, partially offset by an increase in foreign tax credits of $1.1, and an increase in state capital loss carryforwards of $0.8. A valuation allowance of $0.2 remains for deferred tax assets related to other state net operating loss carryforwards and other state deferred tax assets of certain subsidiaries because, on a state reportable basis, it is more likely than not that these assets will expire unused. A valuation allowance of $7.5 also exists for deferred tax assets related to certain subsidiaries of France SAS, and certain subsidiaries of Flaga and UGI International Holdings BV. In Fiscal 2017, the Company reversed $7.6 in valuation allowances associated with foreign tax credit carryforwards whose utilization before expiration had previously not met a more-likely-than-not threshold. In Fiscal 2016, the Company reversed valuation allowances associated with certain state tax net operating loss carryforwards of approximately $5.5 as a result of certain tax planning strategies that were related to legal entity classification. Operating activities and tax deductions related to the exercise of non-qualified stock options contributed to the state net operating losses disclosed above. Prior to the adoption of ASU 2016-09, we would first recognize the utilization of state net operating losses from operations (which exclude the impact of tax deductions for exercises of non-qualified stock options) to reduce income tax expense. Then, to the extent state net operating loss carryforwards, if realized, related to non-qualified stock option deductions, the resulting benefits were credited to UGI Corporation stockholders’ equity. The Fiscal 2016 table of deferred tax assets and liabilities does not include $7.7 of deferred tax assets and a corresponding valuation allowance for unrealized state tax benefits for share-based compensation deductions. We have foreign tax credit carryforwards of approximately $106.1 expiring through 2027 resulting from the actual and planned repatriation of France SAS’s accumulated earnings since acquisition which are includable in U.S. taxable income. Prior to Fiscal 2017, we expected that these credits would expire unused and a valuation allowance had been provided for the entire foreign tax credit carryforward amount. The Company continuously monitors the potential utilization of these credits and performs the appropriate weighing of positive and negative evidence in reaching a conclusion of whether utilization reaches a level of more likely than not. In Fiscal 2017, the Company concluded it was more likely than not that $98.5 of the credits will expire before utilization and therefore reversed $7.6 of the prior year valuation allowance against these credits. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased. We conduct business and file tax returns in the U.S., numerous states, local jurisdictions and in France and certain other European countries. Our U.S. federal income tax returns are settled through the 2013 tax year, our French tax returns are settled through the 2013 tax year, our Austrian tax returns are settled through 2014 and our other European tax returns are effectively settled for various years from 2008 to 2015. State and other income tax returns in the U.S. are generally subject to examination for a period of three to five years after the filing of the respective returns. As of September 30, 2017, we have unrecognized income tax benefits totaling $12.2 including related accrued interest of $0.5. If these unrecognized tax benefits were subsequently recognized, $8.1 would be recorded as a benefit to income taxes on the Consolidated Statement of Income and, therefore, would impact the reported effective tax rate. Generally, a net reduction in unrecognized tax benefits could occur because of the expiration of the statute of limitations in certain jurisdictions or as a result of settlements with tax authorities. There is no material change expected in unrecognized tax benefits and related interest in the next twelve months. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| 2017 |  | 2016 |  | 2015
Unrecognized tax benefits — beginning of year | $ | 7.2 |  |  | $ | 3.2 |  |  | $ | 2.4 |
Additions for tax positions of the current year | 1.9 |  |  | 2.2 |  |  | 0.9 |
Additions for tax positions taken in prior years | 4.6 |  |  | 2.3 |  |  | 0.5 |
Settlements with tax authorities/statute lapses | (1.5 | ) |  | (0.5 | ) |  | (0.6 | )
Unrecognized tax benefits — end of year | $ | 12.2 |  |  | $ | 7.2 |  |  | $ | 3.2 |

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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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