10-K
UNION CARBIDE CORP /NEW/ filed this Form 10-K on 02/15/2018
Entire Document
 

return is filed. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets, which is a defined term under The Act.

For tax years beginning after December 31, 2017, The Act introduces new provisions for U.S. taxation of certain global intangible low-taxed income ("GILTI"). Due to its complexity and a current lack of guidance as to how to calculate the tax, the Corporation is not yet able to determine a reasonable estimate for the impact of the incremental tax liability. When additional guidance is available, the Corporation will make a policy election on whether the additional liability will be recorded in the period in which it is incurred or recognized for the basis differences that would be expected to reverse in future years.

Geographic Allocation of Income and Provision (Credit) for Income Taxes
 
 
 
In millions
2017
2016
2015
Income (Loss) Before Income Taxes
 
 
 
Domestic
$
856

$
49

$
1,254

Foreign
(6
)
8

(11
)
Income before income taxes
$
850

$
57

$
1,243

Current tax expense (benefit)
 
 
 
Federal
$
226

$
265

$
373

State and local
2

(3
)
2

Foreign
3

3

104

Total current tax expense
$
231

$
265

$
479

Deferred tax expense (benefit)
 
 
 
Federal 1
$
392

$
(285
)
$
(31
)
State and local
22

(12
)
(13
)
Total deferred tax expense (benefit)
$
414

$
(297
)
$
(44
)
Provision (Credit) for income taxes
$
645

$
(32
)
$
435

Net Income
$
205

$
89

$
808

1.
2017 includes the impact of The Act; 2016 includes the impact of the asbestos-related charge.

Reconciliation to U.S. Statutory Rate
2017
2016
2015
Statutory U.S. federal income tax rate
35.0
 %
35.0
 %
35.0
 %
U.S. manufacturing deductions

(14.0
)
(0.6
)
Unrecognized tax benefits
(0.4
)
(45.6
)
1.9

Federal tax accrual adjustments
(1.1
)
(12.3
)
(0.6
)
Impact of U.S. tax reform
29.4



Deferred intercompany gain
11.4



State and local tax impact
2.2

(24.6
)
(0.9
)
Other - net
(0.6
)
5.4

0.2

Effective Tax Rate 1
75.9
 %
(56.1
)%
35.0
 %
1.
The tax rate for 2017 was unfavorably impacted by The Act and the recognition of a deferred gain. The tax rate for 2016 was favorably impacted by the release of a reserve in excess of the settlement of an uncertain tax position and from the asbestos-related charge. The tax rate for 2015 was favorably impacted by changes in valuation allowances on state income tax attributes. A change in uncertain tax positions in the fourth quarter of 2015 unfavorably impacted the tax rate and resulted in an increase in "Deferred income tax assets" and "Other noncurrent obligations" in the consolidated balance sheets.


32