Income Taxes	9 Months Ended
Sep. 30, 2018
Income Taxes
Income Taxes	5. Income Taxes Our effective income tax rate for the three and nine months ended September 30, 2018 was 16.6% and 18.9%, respectively, compared with 35.7% and 34.9%, respectively, for the comparable prior year periods. We evaluate our effective income tax rate at each interim period and adjust it as facts and circumstances warrant. The decrease in the effective income tax rate for the three and nine months ended September 30, 2018, compared with the prior year periods, was primarily due to the enactment of tax reform, as discussed below. The difference between federal income taxes computed at the federal statutory rate and reported income taxes for the three and nine months ended September 30, 2018 was primarily due to a reduction in income tax expense related to (i) adjustments to our accruals and related deferred taxes due to the filing of our 2017 income tax returns and changes in state laws; (ii) federal tax credits and (iii) impacts of enactment of tax reform offset, in part, by the unfavorable impact of state and local income taxes. The nine-month period was also favorably impacted by tax audit settlements. The difference between federal income taxes computed at the federal statutory rate and reported income taxes for the three months ended September 30, 2017 was primarily due to the unfavorable impact of state and local income taxes offset, in part, by the favorable impact of federal tax credits and adjustments to our accruals and related deferred taxes due to the filing of our 2016 income tax returns. The difference between federal income taxes computed at the federal statutory rate and reported income taxes for the nine months ended September 30, 2017 was primarily due to the favorable impact of federal tax credits, excess tax benefits related to equity-based compensation and adjustments to our accruals and related deferred taxes due to the filing of our 2016 income tax returns offset, in part, by the unfavorable impact of state and local income taxes and nondeductible impairments. Enactment of Tax Reform — The Act was signed into law on December 22, 2017. The most significant impacts of the Act to the Company include a reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, and a one-time, mandatory transition tax on deemed repatriation of previously tax-deferred and unremitted foreign earnings. In accordance with ASU 2018-05 and SAB 118, the Company recognized the provisional tax impacts related to the remeasurement of our deferred income tax assets and liabilities and the one-time, mandatory transition tax on deemed repatriation during the year ended December 31, 2017. In September 2018, measurement period adjustments to the provisional tax impacts due to the filing of our 2017 income tax returns resulted in a reduction in our income tax expense of $12 million. The reduction consisted of a net income tax benefit of $7 million for the remeasurement of our deferred income tax assets and liabilities due to the decrease in the federal corporate income tax rate and an income tax benefit of $5 million for the one-time, mandatory transition tax. Additional adjustments may be necessary in future periods due to, among other things, the significant complexity of the Act and anticipated additional regulatory guidance that may be issued by the Internal Revenue Service (“IRS”), changes in analysis, interpretations and assumptions the Company has made and actions the Company may take as a result of the Act. We are continuing to gather information to assess the application of the Act and expect to complete our analysis during 2018. Adjustments to Accruals and Related Deferred Taxes — During the three and nine months ended September 30, 2018, adjustments to our accruals and related deferred taxes due to the filing of our 2017 income tax returns and changes in state laws resulted in a reduction in our income tax expense of $27 million and $35 million, respectively, compared with $15 million for both of the prior year periods. Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties and a refined coal facility. On September 28, 2018 we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties. Our consideration for this investment totaled $157 million, which was comprised of a $139 million note payable and an initial cash payment of $18 million. We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate. The low-income housing investments and the coal facility’s refinement processes qualify for federal tax credits that we expect to realize through 2030 under Sections 42 and 45D, and through 2019 under Section 45, respectively, of the Internal Revenue Code. We account for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net losses of unconsolidated entities, in our Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2018, we recognized $5 million and $17 million of net losses and a reduction in our income tax expense of $18 million and $40 million, respectively, primarily because of tax credits realized from these investments. During the three and nine months ended September 30, 2017, we recognized $6 million and $21 million of net losses and a reduction in our income tax expense of $14 million and $39 million, respectively, primarily because of tax credits realized from these investments. Interest expense associated with our investments in low-income housing properties was not material for the periods presented. See Note 14 for additional information related to these unconsolidated variable interest entities. Tax Audit Settlements — We are currently under audit by the IRS, the Canada Revenue Agency and various state and local taxing authorities and our audits are in various stages of completion. During the three and nine months ended September 30, 2018, we settled various tax audits, which resulted in a reduction in our income tax expense of $2 million and $35 million, respectively.

5. Income Taxes

Our effective income tax rate for the three and nine months ended September 30, 2018 was 16.6% and 18.9%, respectively, compared with 35.7% and 34.9%, respectively, for the comparable prior year periods. We evaluate our effective income tax rate at each interim period and adjust it as facts and circumstances warrant. The decrease in the effective income tax rate for the three and nine months ended September 30, 2018, compared with the prior year periods, was primarily due to the enactment of tax reform, as discussed below.

The difference between federal income taxes computed at the federal statutory rate and reported income taxes for the three and nine months ended September 30, 2018 was primarily due to a reduction in income tax expense related to (i) adjustments to our accruals and related deferred taxes due to the filing of our 2017 income tax returns and changes in state laws; (ii) federal tax credits and (iii) impacts of enactment of tax reform offset, in part, by the unfavorable impact of state and local income taxes. The nine-month period was also favorably impacted by tax audit settlements.

The difference between federal income taxes computed at the federal statutory rate and reported income taxes for the three months ended September 30, 2017 was primarily due to the unfavorable impact of state and local income taxes offset, in part, by the favorable impact of federal tax credits and adjustments to our accruals and related deferred taxes due to the filing of our 2016 income tax returns. The difference between federal income taxes computed at the federal statutory rate and reported income taxes for the nine months ended September 30, 2017 was primarily due to the favorable impact of federal tax credits, excess tax benefits related to equity-based compensation and adjustments to our accruals and related deferred taxes due to the filing of our 2016 income tax returns offset, in part, by the unfavorable impact of state and local income taxes and nondeductible impairments.

Enactment of Tax Reform — The Act was signed into law on December 22, 2017. The most significant impacts of the Act to the Company include a reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, and a one-time, mandatory transition tax on deemed repatriation of previously tax-deferred and unremitted foreign earnings.

In accordance with ASU 2018-05 and SAB 118, the Company recognized the provisional tax impacts related to the remeasurement of our deferred income tax assets and liabilities and the one-time, mandatory transition tax on deemed repatriation during the year ended December 31, 2017. In September 2018, measurement period adjustments to the provisional tax impacts due to the filing of our 2017 income tax returns resulted in a reduction in our income tax expense of $12 million. The reduction consisted of a net income tax benefit of $7 million for the remeasurement of our deferred income tax assets and liabilities due to the decrease in the federal corporate income tax rate and an income tax benefit of $5 million for the one-time, mandatory transition tax. Additional adjustments may be necessary in future periods due to, among other things, the significant complexity of the Act and anticipated additional regulatory guidance that may be issued by the Internal Revenue Service (“IRS”), changes in analysis, interpretations and assumptions the Company has made and actions the Company may take as a result of the Act. We are continuing to gather information to assess the application of the Act and expect to complete our analysis during 2018.

Adjustments to Accruals and Related Deferred Taxes — During the three and nine months ended September 30, 2018, adjustments to our accruals and related deferred taxes due to the filing of our 2017 income tax returns and changes in state laws resulted in a reduction in our income tax expense of $27 million and $35 million, respectively, compared with $15 million for both of the prior year periods.

Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties and a refined coal facility. On September 28, 2018 we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties. Our consideration for this investment totaled $157 million, which was comprised of a $139 million note payable and an initial cash payment of $18 million. We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate. The low-income housing investments and the coal facility’s refinement processes qualify for federal tax credits that we expect to realize through 2030 under Sections 42 and 45D, and through 2019 under Section 45, respectively, of the Internal Revenue Code.

We account for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net losses of unconsolidated entities, in our Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2018, we recognized $5 million and $17 million of net losses and a reduction in our income tax expense of $18 million and $40 million, respectively, primarily because of tax credits realized from these investments. During the three and nine months ended September 30, 2017, we recognized $6 million and $21 million of net losses and a reduction in our income tax expense of $14 million and $39 million, respectively, primarily because of tax credits realized from these investments. Interest expense associated with our investments in low-income housing properties was not material for the periods presented. See Note 14 for additional information related to these unconsolidated variable interest entities.

Tax Audit Settlements — We are currently under audit by the IRS, the Canada Revenue Agency and various state and local taxing authorities and our audits are in various stages of completion. During the three and nine months ended September 30, 2018, we settled various tax audits, which resulted in a reduction in our income tax expense of $2 million and $35 million, respectively.