INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Components of Income Before Income Tax

The income tax provisions were calculated based upon the following components of income before income taxes (in millions):

	2017		2016		2015
U.S. income	$	252	$	71	$	24
Foreign income	129		84		43
Total	$	381	$	155	$	67

Summary of Components of the Benefit (Provision) for Income Taxes

The components of the benefit (provision) for income taxes are summarized as follows (in millions):    

	2017			2016			2015
Current tax benefit (expense):
U.S.	$	(1	)	$	(1	)	$	(4	)
Foreign	(11		)	11			(20		)
State and local	(2		)	(1		)	(1		)
Total current tax benefit (expense)	(14		)	9			(25		)
Deferred tax benefit (expense):
U.S.	(28		)	394			3
Foreign	(9		)	(22		)	21
State and local	(1		)	43			—
Total deferred tax benefit	(38		)	415			24
Income tax benefit (expense)	$	(52	)	$	424		$	(1	)

Summary of the Tax Effects of Temporary Differences

Net current and non-current deferred income tax assets (liabilities) included in the consolidated balance sheet consist of the tax effects of temporary differences related to the following (in millions): 

	September 30,
	2017			2016
Accrued compensation and benefits	$	32		$	21
Accrued product warranties	14			13
Inventory costs	9			8
Receivables	18			15
Accrued retiree healthcare benefits	39			169
Retirement pension plans	92			119
Property	10			7
Loss and credit carryforwards	349			455
Other	71			67
Sub-total	634			874
Less: Valuation allowances	(307		)	(379		)
Deferred income taxes - asset	$	327		$	495
Taxes on undistributed income	$	(7	)	$	(7	)
Intangible assets	(87		)	(82		)
Debt basis difference	(16		)	(5		)
Deferred income taxes - liability	$	(110	)	$	(94	)
Net deferred income tax assets	$	217		$	401

Schedule of Net Current and Non-Current Deferred Income Tax Assets (Liabilities)

Net non-current deferred income tax assets (liabilities) are included in the consolidated balance sheet as follows (in millions): 

	September 30,
	2017			2016
Other assets (see Note 13)	$	229		$	413
Other liabilities (see Note 16)	(12		)	(12		)
Net non-current deferred income taxes — asset	$	217		$	401

Summary of Tax Credit Carryforwards and Deferred Tax Assets

The expiration periods for deferred tax assets related to net operating losses and tax credit carryforwards as of September 30, 2017 are included below (in millions). Also included are the associated valuation allowances on these deferred tax assets (in millions).

	Fiscal Year Expiration Periods
	2018-2022		2023-2032		2033-2037		Indefinite		Total
Net Operating Losses and Tax Credit Carryforwards	$	8	$	95	$	14	$	232	$	349
Valuation Allowances on these Deferred Tax Assets	$	7	$	19	$	9	$	215	$	250

Reconciliation of Income Tax (Benefit) Provision at the U.S Statutory Rate

The company’s provision for income taxes was different from the provision for income taxes calculated at the U.S. statutory rate for the reasons set forth below (in millions): 

	2017			2016			2015
Expense for income taxes at statutory tax rate of 35%	$	(133	)	$	(54	)	$	(23	)
State and local income taxes	(14		)	(7		)	(1		)
Foreign income taxed at rates other than 35%	9			5			7
Joint venture equity income	7			3			3
Tax effect of nonfunctional currency transaction	(2		)	(30		)	—
Correlated tax relief	7			51			—
U.S. tax impact on distributions from subsidiaries and joint ventures	(8		)	14			(11		)
Nondeductible expenses	(10		)	(12		)	(9		)
Tax credits	14			61			—
Valuation allowances	56			418			49
Tax rate change	—			(14		)	—
Impact of capital loss	15			—			—
Other	7			(11		)	(16		)
Income tax benefit (expense)	$	(52	)	$	424		$	(1	)

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows (in millions): 

	2017			2016			2015
Balance at beginning of the period	$	243		$	207		$	209
Additions to tax positions recorded during the current year	—			39			15
Additions to tax positions recorded during the prior year	26			—			—
Reductions to tax position recorded in prior years	—			—			(2		)
Reductions to tax positions due to lapse of statutory limits	(2		)	(3		)	(11		)
Translation, other	2			—			(4		)
Balance at end of the period	$	269		$	243		$	207