Income Taxes

9 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE J – INCOME TAXES

Current fiscal year

Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was 2% and 17% for the three and nine months ended June 30, 2022.

The current quarter tax rate was impacted by jurisdictional income mix, as well as a net $1 million benefit primarily from favorable return to provision adjustments for certain jurisdictions. The current nine month tax rate was impacted by jurisdictional income mix as well as $3 million from net unfavorable tax discrete items primarily related to restructuring and separation activity partially offset by a favorable valuation adjustment for certain foreign tax credits and adjustments to uncertain positions.

Prior fiscal year

The overall effective tax rate was a benefit of 57% for the three months ended June 30, 2021 and a benefit of 34% for the nine months ended June 30, 2021. The quarter tax rate was primarily impacted by jurisdictional income mix, as well as $33 million from favorable tax discrete items primarily related to uncertain tax positions. The nine months tax rate impacted by $52 million from favorable tax discrete items primarily related to the Specialty Additives facility sale and uncertain tax positions.

Unrecognized tax benefits

Changes in unrecognized tax benefits are summarized as follows for the nine months ended June 30, 2022.

(In millions)
Balance at October 1, 2021	$	82
Increases related to positions taken in the current year		2
Lapse of statute of limitations		(2	)
Balance at June 30, 2022	$	82

From a combination of statute expirations and audit settlements in the next twelve months, Ashland expects a decrease in the amount accrued for uncertain tax positions of between $6 million and $16 million. It is reasonably possible that there could be other material changes to the amount of uncertain tax positions due to activities of the taxing authorities, settlement of audit issues or the reassessment of existing uncertain tax positions; however, Ashland is not able to estimate the impact of these items at this time.