H. Income Tax

Effective Tax Rate

	Three Months Ended
	December 31,
	2016			2015
	(Dollars in millions)
Provision (benefit) for income taxes	$	17		$	(5	)
Effective tax rate		24	%		74	%

During the three months ended December 31, 2016, the Company recorded a tax provision of $17 million resulting in an effective tax rate of 24%. This amount included a net discrete tax benefit of less than $1 million, primarily comprised of a tax benefit from releases of reserves for uncertain tax positions, partially offset by a net tax charge from excludible foreign exchange gains and losses. During the three months ended December 31, 2015, the Company recorded a tax benefit of $5 million, resulting in an effective tax rate of 74%. This amount included net discrete tax benefits of $6 million, primarily comprised of the net tax benefit from certain foreign exchange gains and losses, the renewal of the U.S. Research and Experimentation credit and releases of reserves for uncertain tax positions.

Uncertainties

Cabot and certain subsidiaries are under audit in a number of jurisdictions. In addition, certain statutes of limitations are scheduled to expire in the near future. It is reasonably possible that a further change in the unrecognized tax benefits may also occur within the next twelve months related to the settlement of one or more of these audits or the lapse of applicable statutes of limitations. However, an estimated range of the impact on the unrecognized tax benefits cannot be quantified at this time.

Cabot files U.S. federal and state and non-U.S. income tax returns in jurisdictions with varying statutes of limitations. The 2012 through 2014 tax years generally remain subject to examination by the United States Internal Revenue Service and various tax years from 2005 through 2014 remain subject to examination by the respective state tax authorities. In significant non-U.S. jurisdictions, various tax years from 2002 through 2015 remain subject to examination by their respective tax authorities. As of December 31, 2016, Cabot’s significant non-U.S. jurisdictions include Canada, China, France, Germany, Italy, Japan, and the Netherlands.

During both the three months ended December 31, 2016 and 2015, Cabot released uncertain tax positions of $2 million due to the expirations of statutes of limitations in various jurisdictions.