Income Taxes (Tables)

12 Months Ended

Sep. 30, 2017

Provision for Income Taxes from Continuing Operations

The provision for income taxes the years ended September 30 consisted of:



(Millions of dollars)	2017			2016			2015
Current:
Federal	$	(230	)	$	312		$	50
State and local, including Puerto Rico	(20		)	17			15
Foreign	200			286			252
	$	(50	)	$	616		$	318
Deferred:
Domestic	$	(64	)	$	(441	)	$	(238	)
Foreign	(10		)	(78		)	(37		)
	(74		)	(519		)	(274		)
Income tax provision	$	(124	)	$	97		$	44

Components of Income from Continuing Operations Before Income Taxes

The components of Income Before Income Taxes for the years ended September 30 consisted of:



(Millions of dollars)	2017			2016			2015
Domestic, including Puerto Rico	$	(386	)	$	(232	)	$	(408	)
Foreign	1,362			1,306			1,147
Income Before Income Taxes	$	976		$	1,074		$	739

Summary of Gross Amounts of Unrecognized Tax Benefits

The table below summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities or additions to deferred tax assets and liabilities if such unrecognized tax benefits were settled. The Company believes it is reasonably possible that certain audits will close within the next twelve months but no significant increases or decreases in the amount of the unrecognized tax benefits are expected to result.



(Millions of dollars)	2017			2016			2015
Balance at October 1	$	469		$	593		$	206
Increase due to acquisitions	—			—			326
Increase due to current year tax positions	41			81			62
Increase due to prior year tax positions	19			10			14
Decreases due to prior year tax positions	(30		)	(3		)	(2		)
Decrease due to settlements with tax authorities	(145		)	(147		)	(10		)
Decrease due to lapse of statute of limitations	(5		)	(65		)	(3		)
Balance at September 30	$	349		$	469		$	593

Deferred Income Taxes

Deferred income taxes at September 30 consisted of:



	2017					2016
(Millions of dollars)	Assets			Liabilities		Assets			Liabilities
Compensation and benefits	$	618		$	—	$	720		$	—
Property and equipment	—			244		—			164
Intangibles	—			1,584		—			1,571
Loss and credit carryforwards	1,098			—		1,101			—
Other	531			164		783			664
	2,247			1,992		2,604			2,399
Valuation allowance	(1,032		)	—		(997		)	—
Net (A)	$	1,216		$	1,992	$	1,606		$	2,399

(A)Net deferred tax assets are included in Other Assets and net deferred tax liabilities are included in Deferred Income Taxes and Other.

Reconciliation of Federal Statutory Tax Rate to Company's Effective Tax Rate

A reconciliation of the federal statutory tax rate to the Company’s effective income tax rate was as follows:



	2017		2016		2015
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of federal tax benefit	(2.6	)	1.5		(3.6	)
Effect of foreign and Puerto Rico earnings and foreign tax credits	(40.8	)	(23.7	)	(24.5	)
Effect of Research Credits and Domestic Production Activities	(2.7	)	(4.4	)	(1.6	)
Effect of change in accounting for excess tax benefit relating to share-based compensation (see Note 2)	(7.9	)	—		—
Other, net	6.3		0.7		0.6
Effective income tax rate	(12.7	)%	9.1	%	5.9	%