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Income Taxes

9 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

On December 22, 2017, HR-1, commonly referred to as the Tax Cuts and Jobs Act (“Act”), was enacted, which made significant revisions to federal income tax laws, including lowering the corporate income tax rate to 21% from 35% effective January 1, 2018, overhauling the taxation of income earned outside the United States and eliminating or limiting certain deductions.

Our deferred tax assets and liabilities are recorded at the enacted tax rates in effect when we expect to recognize the related tax expenses or benefits. These rates vary slightly from year to year but historically had been approximately 39%. During the nine months ended June 30, 2018, we remeasured our deferred tax items at an average rate of approximately 25% and recorded an income tax benefit of $42.5 million.

The Act also imposed a one-time transition tax on the undistributed, previously-untaxed, post-1986 foreign “earnings and profits” (as defined by the IRS) of certain U.S.-owned corporations. Determination of our transition tax liability required us to calculate foreign earnings and profits going back to 1992 and then to assess our historical overall foreign loss position and the applicability of certain foreign tax credits. For the quarter ended March 31, 2018, we recorded a provisional transaction tax of $7.5 million for the one-time deemed repatriation tax on accumulated foreign earnings of our foreign subsidiaries. Upon further analyses of the Act and Notices and regulations issued and proposed by the U.S. Department of the Treasury and the IRS, we finalized our calculations of the transition tax liability during the quarter ended December 31, 2018. As a result, we reduced our initial provision by $0.6 million, which is included as a component of income tax expense in that quarter. At June 30, 2019, the remaining balance of our transition obligation is $6.4 million, which will be paid over the next seven years, as provided in the Act.

The reconciliation between the U.S. federal statutory income tax rate and the effective tax rate is presented below.

	Three months ended						Nine months ended
	June 30,						June 30,
	2019			2018			2019			2018
U.S. federal statutory income tax rate	21.0	%		24.5	%		21.0	%		24.5	%
Adjustments to reconcile to the effective tax rate:
State income taxes, net of federal benefit	4.5			4.8			5.6			4.5
Excess tax (benefits) related to stock compensation	(0.3	)		(0.2	)		(1.4	)		(1.2	)
Domestic production activities deduction	—			(1.7	)		—			(1.6	)
Tax credits	(1.2	)		(1.1	)		(2.7	)		(1.0	)
Global Intangible Low-taxed Income	0.6			—			1.2			—
Reversal of uncertain tax positions	(5.2	)		—			(7.2	)		—
Other	1.9			1.9			3.6			0.2
	21.3	%		28.2	%		20.0	%		25.4	%
Walter Energy Accrual	(0.4	)		—			4.6			—
Transition tax	—			—			(1.9	)		12.3
Remeasurement of deferred tax items	—			—			—			(69.8	)
Effective income tax rate	20.9	%		28.2	%		22.7	%		(32.1	)%

At June 30, 2019 and September 30, 2018, the gross liabilities for unrecognized income tax benefits were $1.2 million and $3.3 million, respectively.

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The reconciliation between the U.S. federal statutory income tax rate and the effective tax rate is presented below.

	Three months ended						Nine months ended
	June 30,						June 30,
	2019			2018			2019			2018
U.S. federal statutory income tax rate	21.0	%		24.5	%		21.0	%		24.5	%
Adjustments to reconcile to the effective tax rate:
State income taxes, net of federal benefit	4.5			4.8			5.6			4.5
Excess tax (benefits) related to stock compensation	(0.3	)		(0.2	)		(1.4	)		(1.2	)
Domestic production activities deduction	—			(1.7	)		—			(1.6	)
Tax credits	(1.2	)		(1.1	)		(2.7	)		(1.0	)
Global Intangible Low-taxed Income	0.6			—			1.2			—
Reversal of uncertain tax positions	(5.2	)		—			(7.2	)		—
Other	1.9			1.9			3.6			0.2
	21.3	%		28.2	%		20.0	%		25.4	%
Walter Energy Accrual	(0.4	)		—			4.6			—
Transition tax	—			—			(1.9	)		12.3
Remeasurement of deferred tax items	—			—			—			(69.8	)
Effective income tax rate	20.9	%		28.2	%		22.7	%		(32.1	)%

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- References

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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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32687-109319

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