Income Taxes (Tables)

12 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Components of income tax expense (benefit)

The components of the Company’s income tax expense are as follows:

	Year Ended September 30,
	2020		2019		2018
	(In millions)
Current tax expense:
Federal	$	484.0	$	407.3	$	373.2
State	104.4		79.3		53.6
	588.4		486.6		426.8
Deferred tax expense (benefit):
Federal	20.0		13.9		158.7
State	(5.9)		6.2		12.2
	14.1		20.1		170.9
Total income tax expense	$	602.5	$	506.7	$	597.7

Comparison of income tax expense (benefit) and tax computed at the statutory rate

Differences between income tax expense and tax computed by applying the federal statutory rate of 21% in fiscal 2020 and 2019, and 24.5% in fiscal 2018 to income before income taxes during each year is due to the following:

	Year Ended September 30,
	2020		2019		2018
	(In millions)
Income taxes at federal statutory rate	$	626.4	$	446.3	$	505.0
Increase (decrease) in tax resulting from:
State income taxes, net of federal benefit	79.1		69.1		59.4
Domestic production activities deduction	—		—		(36.7)
Valuation allowance	(11.2)		(0.2)		(7.3)
Tax credits	(93.4)		(1.6)		(19.0)
Excess tax benefit from stock-based compensation	(22.3)		(16.1)		(21.2)
Tax law change	—		—		108.7
Tax contingencies	8.9		—		—
Other	15.0		9.2		8.8
Total income tax expense	$	602.5	$	506.7	$	597.7

Components of deferred tax assets and liabilities

Components of deferred income taxes are summarized as follows:

	September 30,
	2020		2019
	(In millions)
Deferred tax assets:
Inventory costs	$	37.6	$	39.8
Inventory impairments	21.5		27.9
Warranty and construction defect costs	156.7		135.1
Net operating loss carryforwards	17.5		31.5
Tax credit carryforwards	2.1		3.5
Incentive compensation plans	68.3		65.1
Other	15.6		7.2
Total deferred tax assets	319.3		310.1
Valuation allowance	(7.5)		(18.7)
Total deferred tax assets, net of valuation allowance	$	311.8	$	291.4
Deferred tax liabilities:
Deferral of profit on home closings	131.9		95.4
Depreciation of fixed assets	19.0		14.2
Other	16.0		18.7
Total deferred tax liabilities	$	166.9	$	128.3
Deferred income taxes, net	$	144.9	$	163.1

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for fiscal 2020 is as follows.

	Year Ended September 30, 2020
	(In millions)
Unrecognized tax benefits, beginning of year	$	—
Additions attributable to tax positions taken in the current year	8.9
Additions attributable to tax positions taken in prior years	—
Settlements	—
Unrecognized tax benefits, end of year	$	8.9