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Income Taxes
3 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The effective tax rate for the quarters ended December 31, 2018 and December 31, 2017 was 18.2% and negative 69.2%, respectively. The difference primarily relates to the impact of the one-time remeasurement of accumulated deferred income taxes under the 2017 Tax Reform Act during fiscal 2018 discussed below.
On December 22, 2017, the 2017 Tax Reform Act was enacted. The 2017 Tax Reform Act significantly changed the taxation of business entities and included a reduction in the corporate federal income tax rate from 35% to a blended 24.5% for fiscal 2018 and 21% for fiscal 2019 and beyond. In addition, beginning in fiscal 2019, the corporate alternative minimum tax (AMT) is eliminated and there are enhanced limitations on the deductibility of certain executive compensation. For the rate regulated subsidiaries, the 2017 Tax Reform Act also allows for the continued deductibility of interest expense, the elimination of full expensing for tax purposes of certain property acquired after September 30, 2018 and the continuation of certain rate normalization requirements for accelerated depreciation benefits. The non-rate regulated subsidiaries are allowed full expensing of certain property acquired after September 27, 2017 and have potential limitations on the deductibility of interest expense beginning in fiscal 2019.
The changes noted above had a material impact on the financial statements in the year ended September 30, 2018. The Company’s accumulated deferred income taxes were remeasured based upon the new tax rates. For the non-rate regulated activities through the year ended September 30, 2018, the change in beginning of the year deferred income taxes of $103.5 million was recorded as a reduction to income tax expense. For the Company's rate regulated activities, the reduction in deferred income taxes of $336.7 million was recorded as a decrease to Recoverable Future Taxes of $65.7 million and an increase to Taxes Refundable to Customers of $271.0 million. The 2017 Tax Reform Act includes provisions that stipulate how these excess deferred taxes are to be passed back to customers for certain accelerated tax depreciation benefits. Potential refunds of other deferred income taxes will be determined by the federal and state regulatory agencies. For further discussion, refer to Note 10 - Regulatory Matters.
The 2017 Tax Reform Act also provides that the Company’s existing AMT credit carryovers are refundable, if not utilized to reduce tax, beginning in fiscal 2019. During fiscal 2018, the Department of Treasury indicated that a portion of the refundable AMT credit carryovers would be subject to sequestration. Accordingly, the Company recorded a $5.0 million valuation allowance related to this sequestration. During the quarter ended December 31, 2018, the Office of Management and Budget determined that these AMT refunds would not be subject to sequestration. As such, the Company has removed the valuation allowance. In addition, the Company reclassified the estimated fiscal 2019 refund, approximately $42.1 million, from Deferred Income Taxes to Other Assets.
The SEC issued guidance in Staff Accounting Bulletin 118 (SAB 118) which provided for up to a one year period (the measurement period) in which to complete the required analysis and income tax accounting for the 2017 Tax Reform Act. Based upon the available guidance, the Company has completed the remeasurement of accumulated deferred income taxes. Any subsequent guidance or clarification related to the 2017 Tax Reform Act will be accounted for in the period issued.