Entity information:
INCOME TAXES
The benefit for income taxes consisted of the following:
 
Year Ended September 30,
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
(5.8
)
 
$
37.6

 
$
59.5

State
4.3

 
1.7

 
2.9

Foreign
10.2

 
8.5

 
5.7

 
8.7

 
47.8

 
68.1

Deferred:
 
 
 
 
 
Federal
19.7

 
(64.8
)
 
(116.0
)
State
2.7

 
(7.5
)
 
(2.1
)
Foreign
(5.0
)
 
(2.3
)
 
(2.0
)
 
17.4

 
(74.6
)
 
(120.1
)
Income tax expense (benefit)
$
26.1

 
$
(26.8
)
 
$
(52.0
)

The effective tax rate for fiscal 2017 was 35.1% compared to 89.0% for fiscal 2016 and 31.1% for fiscal 2015. A reconciliation of income tax benefit with amounts computed at the statutory federal rate follows:
 
Year Ended September 30,
 
2017
 
2016
 
2015
Computed tax at federal statutory rate (35%)
$
26.1

 
$
(10.5
)
 
$
(58.6
)
Non-deductible goodwill impairment loss
7.2

 
—

 
16.5

Non-deductible compensation
1.8

 
2.6

 
0.4

Non-deductible transaction costs
2.9

 
—

 
0.6

Domestic production activities deduction
—

 
(4.3
)
 
(5.9
)
State income taxes, net of effect on federal tax
0.8

 
(6.2
)
 
(7.2
)
Non-taxable interest income
(3.4
)
 
(2.6
)
 
(2.7
)
Valuation allowances
4.8

 
3.8

 
6.7

Change in deferred tax rates
—

 
(2.0
)
 
4.9

Uncertain tax positions
(0.5
)
 
(2.0
)
 
(3.4
)
Sale and liquidation of Michael Foods Canadian egg business
—

 
(3.6
)
 
—

Enacted tax law and changes
—

 
0.7

 
(0.4
)
Income tax credits
(1.4
)
 
(1.5
)
 
(0.4
)
Rate differential on foreign income
(6.8
)
 
(1.8
)
 
(1.4
)
Excess tax benefits for share-based payments
(6.2
)
 
—

 
—

Other, net (none in excess of 5% of statutory tax)
0.8

 
0.6

 
(1.1
)
Income tax expense (benefit)
$
26.1

 
$
(26.8
)
 
$
(52.0
)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax non-current assets (liabilities) were as follows:
 
September 30, 2017
 
September 30, 2016
 
Assets
 
Liabilities
 
Net
 
Assets
 
Liabilities
 
Net
Accrued vacation, incentive and severance
$
16.2

 
$
—

 
$
16.2

 
$
14.3

 
$
—

 
$
14.3

Inventory
3.0

 
—

 
3.0

 
2.5

 
—

 
2.5

Accrued liabilities
16.6

 
—

 
16.6

 
24.0

 
—

 
24.0

Property
—

 
(210.1
)
 
(210.1
)
 
—

 
(172.3
)
 
(172.3
)
Intangible assets
—

 
(882.5
)
 
(882.5
)
 
—

 
(784.3
)
 
(784.3
)
Pension and other postretirement benefits
5.3

 
—

 
5.3

 
31.7

 
—

 
31.7

Stock-based and deferred compensation
28.7

 
—

 
28.7

 
22.2

 
—

 
22.2

Derivative mark-to-market adjustments
91.9

 
—

 
91.9

 
121.6

 
—

 
121.6

Net operating loss carryforwards, credits
38.7

 
—

 
38.7

 
22.2

 
—

 
22.2

Other items
6.5

 
(1.6
)
 
4.9

 
5.1

 
(1.3
)
 
3.8

Total gross deferred income taxes
206.9

 
(1,094.2
)
 
(887.3
)
 
243.6

 
(957.9
)
 
(714.3
)
Valuation allowance
(18.5
)
 
—

 
(18.5
)
 
(12.2
)
 
—

 
(12.2
)
Total deferred taxes
$
188.4

 
$
(1,094.2
)
 
$
(905.8
)
 
$
231.4

 
$
(957.9
)
 
$
(726.5
)

As of September 30, 2017, the Company had United States federal net operating loss (“NOL”) carryforwards totaling approximately $96.8 which have expiration dates beginning in fiscal 2021 and extending through fiscal 2037, as well as state NOL carryforwards totaling approximately $360.2, which have expiration dates beginning in fiscal 2018 and extending through fiscal 2037. As of September 30, 2017, Post had NOL carryforwards in foreign jurisdictions of $9.3.
As certain of these NOLs and carryforwards were acquired through acquisitions made during fiscal years 2013, 2014 and 2017, as a result of these ownership changes, the deductibility of the NOLs is subject to limitation under section 382 of the Internal Revenue Code (“IRC”) and similar limitations under state tax law. Giving consideration to IRC section 382 and state limitations, the Company believes it will generate sufficient taxable income to fully utilize the United States federal and certain state NOLs before they expire. Approximately $11.8 of the deferred tax asset related to the state NOLs has been offset by a valuation allowance based on management’s judgment that it is more likely than not that the benefits of those deferred tax assets will not be realized in the future.
No provision has been made for income taxes on undistributed earnings of consolidated foreign subsidiaries of $56.4 at September 30, 2017 since it is our intention to indefinitely reinvest undistributed earnings of our foreign subsidiaries. It is not practicable to estimate the additional income taxes and applicable foreign withholding taxes that would be payable on the remittance of such undistributed earnings.
For fiscal 2017, 2016 and 2015, foreign income before income taxes was $24.7, $29.6 and $7.0, respectively.
Unrecognized Tax Benefits
The Company recognizes the tax benefit from uncertain tax positions only if it is “more likely than not” the tax position will be sustained on examination by the taxing authorities. The tax benefits recognized from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. To the extent the Company’s assessment of such tax positions changes, the change in estimate will be recorded in the period in which the determination is made.
Unrecognized tax benefits activity for the years ended September 30, 2017 and 2016 is presented in the following table:
Unrecognized tax benefits, September 30, 2015
 
$
11.3

Additions for tax positions taken in current year and acquisitions
 
0.1

Reductions for tax positions taken in prior years
 
(1.6
)
Settlements with tax authorities/statute expirations
 
(0.5
)
Unrecognized tax benefits, September 30, 2016
 
$
9.3

Additions for tax positions taken in current year and acquisitions
 
—

Reductions for tax positions taken in prior years
 
—

Settlements with tax authorities/statute expirations
 
(0.7
)
Unrecognized tax benefits, September 30, 2017
 
$
8.6


The amount of the net unrecognized tax benefits that, if recognized, would directly affect the effective tax rate is $5.6 at September 30, 2017. The Company believes that, due to expiring statutes of limitations and settlements with authorities, it is reasonably possible that the total unrecognized tax benefits may decrease by less than $1.0 within twelve months of the reporting date.
The Company classifies tax-related interest and penalties as components of income tax expense. The accrued interest and penalties are not included in the table above. The Company had accrued interest and penalties of $2.7 and $2.4 at September 30, 2017 and 2016, respectively. The Company had net expense (benefit) of $0.3, $(0.1) and zero for interest and penalties in the Consolidated Statements of Operations for the years ended September 30, 2017, 2016 and 2015, respectively. Interest and penalties were computed on the difference between the tax position recognized for financial reporting purposes and the amount previously taken on the Company’s tax returns.
United States federal, United States state and Canadian income tax returns for the tax years ended September 30, 2016, 2015 and 2014 are subject to examination by the tax authorities in each respective jurisdiction. The Michael Foods tax return for the short year ended June 2, 2014 was examined by the Internal Revenue Service without adjustment.
For the NPE acquisition made in 2017 and acquisitions made in 2015, the seller generally retained responsibility for all income tax liabilities through the date of acquisition. With respect to the acquisition of the Weetabix Group, the Company assumed substantially all income tax liabilities for those jurisdictions which remain subject to examination. With respect to the Michael Foods acquisition, the Company assumed all income tax liabilities for those jurisdictions which remain subject to examination, consisting primarily of the short tax year ended June 2, 2014, the date of acquisition. The Company did not assume any pre-acquisition tax liabilities related to the 2016 acquisition of WEF.