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

A transaction for the sale of stock between the Corporation and Dow in 2014 created a gain that was initially deferred for tax purposes. This deferred gain became taxable as a result of activities executed in anticipation of the intended separation of DowDuPont into three publicly traded companies. As a result, in the third quarter of 2017, the Corporation increased “Income taxes payable” in the consolidated balance sheets and recorded a charge to "Provision (Credit) for income taxes" in the consolidated statements of income of $97 million

Deferred Tax Balances at Dec 31
2017
2016
In millions
Assets
Liabilities
Assets
Liabilities
Property
$

$
132

$

$
183

Tax loss and credit carryforwards
47


53


Postretirement benefit obligations
251


442


Other accruals and reserves
349

1

611


Inventory
8


14


Other - net
9

1

13

2

Subtotal
$
664

$
134

$
1,133

$
185

Valuation allowances 1
(19
)

(20
)

Total
$
645

$
134

$
1,113

$
185

1.
Primarily related to the realization of recorded tax benefits on state tax loss carryforwards from operations in the United States.

Operating Loss and Tax Credit Carryforwards
2017
2016
In millions
Asset
Asset
Operating loss carryforwards
 
 
Expire within 5 years
$
29

$
31

Expire after 5 years or indefinite expiration
12

17

Total operating loss carryforwards
$
41

$
48

Tax credit carryforwards
 
 
Expire within 5 years
$
1

$
1

Expire after 5 years or indefinite expiration
5

4

Total tax credit carryforwards
$
6

$
5


Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently invested amounted to $9 million at December 31, 2017 and $36 million at December 31, 2016. The unrecognized deferred tax liability on those earnings is not material.

The following table provides a reconciliation of the Corporation's unrecognized tax benefits:

Total Gross Unrecognized Tax Benefits
 
 
 
In millions
2017
2016
2015
Total unrecognized tax benefits at Jan 1
$
1

$
68

$
1

Increases related to positions taken on items from prior years

139

67

Settlement of uncertain tax positions with tax authorities

(206
)

Total unrecognized tax benefits at Dec 31
$
1

$
1

$
68

Total unrecognized tax benefits that, if recognized, would impact the effective tax rate
$
1

$
1

$
1

Total amount of interest and penalties (benefit) recognized in "Provision (Credit) for income taxes"
$
(6
)
$
(36
)
$
37

Total accrual for interest and penalties recognized in the consolidated balance sheets
$

$

$
38


In the fourth quarter of 2016, a settlement in the amount of $206 million was reached for a tax matter regarding a historical change in the legal ownership structure of a nonconsolidated affiliate. As a result of the settlement, the Corporation recorded a net decrease to uncertain tax positions of $67 million in "Other noncurrent obligations" in the consolidated balance sheets.

The Corporation is included in Dow's consolidated federal income tax group and consolidated tax return. Current and deferred tax expenses are calculated for the Corporation as a stand-alone group and are allocated to the group from the consolidated totals, consistent with the Dow-UCC Tax Sharing Agreement. UCC is currently under examination in a number of tax jurisdictions,

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