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v3.22.2.2

Income Taxes | 12 Months Ended
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Sep. 30, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Note 7 — Income Taxes Income before income taxes comprises the following:
| 2022 |  | 2021 |  | 2020
Domestic | $ | 362 |  |  | $ | 647 |  |  | $ | 424 |
Foreign | 1,025 |  |  | 1,342 |  |  | 243 |
Total income before income taxes | $ | 1,387 |  |  | $ | 1,989 |  |  | $ | 667 |
The provisions for income taxes consist of the following:
| 2022 |  | 2021 |  | 2020
Current expense (benefit): |  |  |  |  |
Federal | $ | 24 |  |  | $ | (48) |  |  | $ | (85) |
State | 18 |  |  | 7 |  |  | 4 |
Foreign | 50 |  |  | 85 |  |  | 70 |
Total current expense (benefit) | 92 |  |  | 44 |  |  | (11) |
Deferred expense (benefit): |  |  |  |  |
Federal | 45 |  |  | 168 |  |  | 135 |
State | (17) |  |  | 48 |  |  | 19 |
Foreign | 193 |  |  | 262 |  |  | (8) |
Total deferred expense | 221 |  |  | 478 |  |  | 146 |
Total income tax expense | $ | 313 |  |  | $ | 522 |  |  | $ | 135 |
Federal income taxes for Fiscal 2022 are net of foreign tax credits of $5. There were none utilized in Fiscal 2021 or Fiscal 2020. A reconciliation from the U.S. federal statutory tax rate to our effective tax rate is as follows:
| 2022 |  | 2021 |  | 2020
U.S. federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Difference in tax rate due to: |  |  |  |  |
Effects of U.S. tax legislation | — |  |  | (0.8) |  |  | (4.7) |
Effects of tax rate changes - International | (2.3) |  |  | (1.3) |  |  | 0.3 |
Effects of tax rate changes – State, net of federal benefit | (1.4) |  |  | — |  |  | — |
State income taxes, net of federal benefit | 1.5 |  |  | 1.9 |  |  | 2.8 |
Valuation allowance adjustments | (0.5) |  |  | 1.0 |  |  | — |
Effects of foreign operations | 4.4 |  |  | 4.6 |  |  | 1.3 |
Excess tax benefits on share-based payments | (0.3) |  |  | (0.1) |  |  | (0.2) |
Other, net | 0.2 |  |  | (0.1) |  |  | (0.3) |
Effective tax rate | 22.6 | % |  | 26.2 | % |  | 20.2 | %
In July 2022, tax legislation was enacted in Pennsylvania reducing the state’s corporate net income tax rate from 9.99% to 4.99% over a nine-year period, beginning with an initial reduction to 8.99% beginning in Fiscal 2024. The legislation resulted in a $20 benefit being recorded in Fiscal 2022 based on the Company’s analysis of future reversals of net deferred tax liabilities. In February 2021, tax legislation was enacted in Italy which allowed the Company to align book basis with tax basis on certain assets in exchange for paying a three percent substitute tax payment payable in three annual installments. This election resulted in a $23 net benefit in Fiscal 2021. Timing of the recovery of the resulting incremental tax basis was changed with legislation in Fiscal 2022 extending the deductible period of recovery from 18 to 50 years. On March 27, 2020 the CARES Act was enacted into law. The primary impact of the legislation was the change in federal net operating loss carryback rules which allowed the Company’s U.S. federal tax losses generated in Fiscal 2021 and Fiscal 2020 to be carried back to Fiscal 2016 and Fiscal 2015. The carryback of our Fiscal 2021 and Fiscal 2020 U.S. federal tax losses from a 21% rate environment to offset taxable income in Fiscal 2016 and Fiscal 2015 in a 35% rate environment generated incremental benefits of $15 and $32, respectively. A $90 refund claim for the Fiscal 2020 carryback to Fiscal 2015 was filed and has been approved by the IRS, though the actual cash refund was not received in Fiscal 2022. Of the outstanding $90 refund, $75 was received subsequent to Fiscal 2022. A $37 refund claim for the Fiscal 2021 claim has been filed. Both are included in “Income taxes receivable” on the Consolidated Balance Sheet at September 30, 2022 and 2021. On July 20, 2020, the Treasury Department issued final regulations under IRC Section 951A permitting a taxpayer to elect to exclude, from its inclusion of GILTI, income subject to a high effective rate of foreign tax. The impact of these final regulations reduced U.S. tax of foreign source income in Fiscal 2022, Fiscal 2021, and Fiscal 2020. Our effective tax rate is subject to the impact of changes to the taxation of foreign source income made by the TCJA and the high tax exception regulations issued in July 2020. Income tax expense for Fiscal 2022, Fiscal 2021 and Fiscal 2020 includes $3, $8 and $0, respectively, of GILTI taxes that are treated as current period costs and carry no related deferred taxes. Pennsylvania and West Virginia utility ratemaking practices permit the flow through to ratepayers of state tax benefits resulting from accelerated tax depreciation. For Fiscal 2022, Fiscal 2021 and Fiscal 2020, the beneficial effects of state tax flow through of accelerated depreciation reduced income tax expense by $10, $9, and $11, respectively. Deferred tax liabilities (assets) comprise the following at September 30:
| 2022 |  | 2021
Excess book basis over tax basis of property, plant and equipment | $ | 867 |  |  | $ | 937 |
Utility regulatory assets | 106 |  |  | 105 |
Intangible assets and goodwill | 75 |  |  | 77 |
Derivative instrument assets | 514 |  |  | 322 |
Other | 33 |  |  | 36 |
Gross deferred tax liabilities | 1,595 |  |  | 1,477 |
Investment in AmeriGas Partners | (79) |  |  | (102) |
Pension plan liabilities | (21) |  |  | (29) |
Employee-related benefits | (38) |  |  | (45) |
Operating loss carryforwards | (48) |  |  | (53) |
Foreign tax credit carryforwards | (76) |  |  | (79) |
Utility regulatory liabilities | (85) |  |  | (102) |
Utility environmental liabilities | (15) |  |  | (16) |
Other | (125) |  |  | (107) |
Gross deferred tax assets | (487) |  |  | (533) |
Deferred tax assets valuation allowance | 141 |  |  | 138 |
Net deferred tax liabilities | $ | 1,249 |  |  | $ | 1,082 |
At September 30, 2022, we carried foreign net operating loss carryforwards of $5 relating to Flaga, $30 at certain subsidiaries of UGI France, and $10 in the Netherlands with no expiration dates. We have state net operating loss carryforwards primarily relating to certain subsidiaries that approximate $787 and expire through 2042. We also have federal operating loss carryforwards of $16 for Mountaintop Energy Holdings, LLC and $6 for certain operations of AmeriGas Propane. At September 30, 2022, deferred tax assets relating to operating loss carryforwards amounted to $48 related to various UGI subsidiaries. Valuation allowances against deferred tax assets exist for foreign tax credit carryforwards, net operating loss carryforwards of foreign subsidiaries, capital loss carryforwards and a notional interest deduction. The valuation allowance for all deferred tax assets increased by $3 in Fiscal 2022, which included a $17 increase in a notional interest deduction carryover, a $4 decrease from state tax rate changes, offset by a release of $6 against FTCs, that will be realizable in the future and a $4 decrease related to foreign net operating loss carry forwards. The valuation allowance for all deferred tax assets increased by $33 in Fiscal 2021, which included a $30 increase related to future capital losses from the PennEast and Hudson investments, and a $10 increase in a notional interest deduction carryover, partially offset by the release of $10 against FTCs. 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 2018 tax year, our French tax returns are settled through the 2018 tax year, our Austrian tax returns are settled through 2017 and our other European tax returns are effectively settled for various years from 2014 to 2019. 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. The Company’s unrecognized tax benefits including amounts related to accrued interest, which if subsequently recognized would be recorded as a benefit to income taxes, amounted to $4, $4, and $4 at September 30, 2022, 2021 and 2020, respectively. Activity related to these unrecognized tax benefits was not material for all periods presented.

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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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