Note 6 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes includes:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017		2016
	(Millions)
Current:
Federal	$	7		$	—		$	10	$	—
State	9			1			17		1
Foreign	—			—			—		(1		)
	16			1			27		—
Deferred:
Federal	(11		)	8			63		(49		)
State	19			71			36		60
Foreign	—			(11		)	—		(85		)
	8			68			99		(74		)
Provision (benefit) for income taxes	$	24		$	69		$	126	$	(74	)

The effective income tax rate for the three months ended September 30, 2017, is less than the federal statutory rate. This is primarily due to the impact of the allocation of income to nontaxable noncontrolling interests, partially offset by the effect of state income taxes, including an $18 million provision related to an increase in the deferred state income tax rate (net of federal benefit).

The effective income tax rate for the nine months ended September 30, 2017, is less than the federal statutory rate. This is primarily due to the impact of the allocation of income to nontaxable noncontrolling interests and releasing a $127 million valuation allowance on a deferred tax asset associated with a capital loss carryover, partially offset by the effect of state income taxes, including an $18 million provision related to an increase in the deferred state income tax rate (net of federal benefit). In 2016, we recorded a valuation allowance on a deferred tax asset associated with a capital loss that was incurred with the sale of our Canadian operations. The sale of the Geismar olefins facility in July 2017 (see Note 3 – Divestitures) generated capital gains sufficient to offset the capital loss carryover, thereby allowing us to reverse the valuation allowance in full.

The effective income tax rate for the three months ended September 30, 2016, is less than the federal statutory rate primarily due to the impact of the allocation of income to nontaxable noncontrolling interests and the effects of taxes on foreign operations, partially offset by the effect of state income taxes, including a $43 million provision related to an increase in the deferred state income tax rate (net of federal benefit).

The effective income tax rate for the nine months ended September 30, 2016, is less than the federal statutory rate primarily due to the effects of taxes on foreign operations, which includes the reversal of anticipatory foreign tax credits and a valuation allowance associated with impairments and losses on the sale of our Canadian operations (see Note 3 – Divestitures), and the effect of state income taxes, including a $43 million provision related to an increase in the deferred state income tax rate (net of federal benefit). These decreases are partially offset by the impact of the allocation of income to nontaxable noncontrolling interests. The foreign income tax provision includes the tax effect of the impairments associated with our Canadian disposition. (See Note 11 – Fair Value Measurements and Guarantees.)

During the next 12 months, we do not expect ultimate resolution of any unrecognized tax benefit associated with domestic or international matters to have a material impact on our unrecognized tax benefit position.