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Income Taxes (Tables) | 12 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
Summary of Provision for Income Taxes Related to Continuing Operations | A summary of the provision for income taxes related to continuing operations follows.
(In millions) |  | 2019 |  |  | 2018 |  |  | 2017 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (2 | ) |  | $ | 20 |  |  | $ | (26 | )
State |  |  | (7 | ) |  |  | (2 | ) |  |  | (1 | )
Foreign |  |  | 35 |  |  |  | 74 |  |  |  | 37 |
|  |  | 26 |  |  |  | 92 |  |  |  | 10 |
Deferred |  |  | 20 |  |  |  | (100 | ) |  |  | (26 | )
Income tax expense (benefit) |  | $ | 46 |  |  | $ | (8 | ) |  | $ | (16 | )
Summary of Temporary Differences of Deferred Tax Assets and Liabilities | Temporary differences that give rise to significant deferred tax assets and liabilities as of September 30 are presented in the following table.
(In millions) |  | 2019 |  |  | 2018 |
Deferred tax assets |  |  |  |  |  |  |  |
Foreign net operating loss carryforwards (a) |  | $ | 36 |  |  | $ | 39 |
Employee benefit obligations |  |  | 29 |  |  |  | 28 |
Environmental, self-insurance and litigation reserves (net of receivables) |  |  | 114 |  |  |  | 119 |
State net operating loss carryforwards (net of unrecognized tax benefits) (b) |  |  | 38 |  |  |  | 48 |
Compensation accruals |  |  | 28 |  |  |  | 31 |
Credit carryforwards (net of unrecognized tax benefits) (c) |  |  | 10 |  |  |  | 10 |
Other items |  |  | 38 |  |  |  | 32 |
Valuation allowances (d) |  |  | (83 | ) |  |  | (79 | )
Total deferred tax assets |  |  | 210 |  |  |  | 228 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Goodwill and other intangibles (e) |  |  | 243 |  |  |  | 269 |
Property, plant and equipment |  |  | 207 |  |  |  | 217 |
Unremitted earnings |  |  | 1 |  |  |  | — |
Total deferred tax liabilities |  |  | 451 |  |  |  | 486 |
Net deferred tax liability |  | $ | (241 | ) |  | $ | (258 | )
(a) | Gross net operating loss carryforwards of $133 million will expire in future years beyond 2021 or have no expiration.
(b) | Apportioned net operating loss carryforwards generated of $0.9 billion will expire in future years as follows: $48 million in 2020, $57 million in 2021 and the remaining balance in other future years.
(c) | Credit carryforwards consist primarily of foreign tax credits of $4 million expiring in future years beyond 2020, and miscellaneous tax credits that will expire in 2024 or other future years.
(d) | Valuation allowances primarily relate to certain state and foreign net operating loss carryforwards.
(e) | The total gross amount of goodwill as of September 30, 2019 expected to be deductible for tax purposes is $8 million.
Summary of Income from Continuing Operations Before Income Taxes and Reconciliation of Provision for Income Taxes | The U.S. and foreign components of income from continuing operations before income taxes and a reconciliation of the statutory federal income tax with the provision for income taxes follow. The foreign components of income from continuing operations disclosed in the following table exclude any allocations of certain corporate expenses incurred in the U.S.
(In millions) |  | 2019 |  |  | 2018 |  |  | 2017 |
Income (loss) from continuing operations before income taxes |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | (76 | ) |  | $ | (214 | ) |  | $ | (433 | )
Foreign |  |  | 146 |  |  |  | 225 |  |  |  | 237 |
Income (loss) from continuing operations before income taxes |  | $ | 70 |  |  | $ | 11 |  |  | $ | (196 | )
Income taxes computed at U.S. statutory rate (a) |  | $ | 15 |  |  | $ | 3 |  |  | $ | (69 | )
Increase (decrease) in amount computed resulting from |  |  |  |  |  |  |  |  |  |  |  |
Tax reform (b) |  |  | 29 |  |  |  | 44 |  |  |  | — |
Uncertain tax positions |  |  | 10 |  |  |  | (13 | ) |  |  | 12 |
Foreign dividends, deemed inclusions and other restructuring (c) |  |  | 11 |  |  |  | 48 |  |  |  | 125 |
Foreign tax credits |  |  | (17 | ) |  |  | (54 | ) |  |  | (29 | )
Valuation allowance changes (d) |  |  | 14 |  |  |  | (2 | ) |  |  | (3 | )
Research and development credits |  |  | (6 | ) |  |  | (5 | ) |  |  | (6 | )
State taxes (e) |  |  | (5 | ) |  |  | (3 | ) |  |  | (16 | )
International rate differential |  |  | (30 | ) |  |  | (50 | ) |  |  | (57 | )
Other items (f) |  |  | 25 |  |  |  | 24 |  |  |  | 27 |
Income tax expense (benefit) |  | $ | 46 |  |  | $ | (8 | ) |  | $ | (16 | )
(a) | The domestic tax rates are 35% for 2017 and 24.5% for 2018. For 2019 and forward, the domestic tax rate is expected to be 21%.
(b) | 2019 includes an expense of $29 million related to a return to provision adjustment for transition tax. 2018 includes expense of $187 million related to the one-time transition tax, a benefit of $139 million related to the deferred rate change and a benefit of $4 million related to tax reform in a foreign jurisdiction. Foreign tax credits of $46 million related to the transition tax were included within the foreign tax credits caption. Other items related to the transition tax or other U.S. tax reform offset to immaterial amounts within the state taxes, uncertain tax positions and other captions and net to zero in the aggregate. In summary, total U.S. tax reform expense was $2 million related to transition tax expense of $187 million, a deferred rate change benefit of $139 million and a foreign tax credit benefit of $46 million. Ashland completed its calculation of the total post-1986 E&P for these foreign subsidiaries and recorded an additional unfavorable $29 million adjustment in 2019.
(c) | 2018 includes a gain recognition of $6 million, deemed inclusions of $13 million and tax restructuring costs of $23 million.
(d) | 2019 includes $5 million related to state tax NOL’s and $9 million related to a foreign jurisdiction. 2018 includes a $5 million benefit for the release of a foreign tax credit valuation allowance; 2017 includes $25 million of benefit for the release of a foreign tax credit valuation allowance and $22 million of expense for state, foreign and domestic federal deferred tax asset valuation allowances net of a NOL write-off offset.
(e) | 2018 includes a $27 million tax benefit for a valuation reserve release against state net operating losses and $26 million of tax expense for state tax rate changes; 2017 includes $6 million of benefit for state tax rate changes primarily related to the final distribution of Valvoline.
(f) | 2019 includes $19 million primarily related to GILTI permanent adjustments. 2018 includes $22 million related to foreign withholding taxes; 2017 includes $7 million of expense related to foreign withholding taxes, $5 million of expense for the write-off of a prepaid asset related to an intercompany transaction with a Valvoline legal entity, $4 million of expense for non-deductible transaction costs primarily related to the Valvoline spin-off and $6 million of benefit for certain other domestic permanent items.
Summary of Changes in Unrecognized Tax Benefits | Changes in unrecognized tax benefits were as follows:
(In millions) |  |  |  |
Balance at September 30, 2017 (a) |  | $ | 194 |
Increases related to positions taken on items from prior years |  |  | 5 |
Decreases related to positions taken on items from prior years |  |  | (40 | )
Increases related to positions taken in the current year |  |  | 14 |
Lapse of statute of limitations |  |  | (5 | )
Settlement of uncertain tax positions with tax authorities |  |  | (4 | )
Balance at September 30, 2018 (a) |  |  | 164 |
Increases related to positions taken on items from prior years |  |  | 1 |
Decreases related to positions taken on items from prior years |  |  | (5 | )
Increases related to positions taken in the current year |  |  | 21 |
Lapse of statute of limitations |  |  | (10 | )
Disposition of Composites and Marl facility |  |  | (6 | )
Balance at September 30, 2019 |  | $ | 165 |
(a) | Ashland has indemnity receivables from Valvoline and Pharmachem for $32 million and $39 million of the gross unrecognized tax benefits at September 30, 2019 and 2018, respectively.

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