Income Taxes |
9 Months Ended |
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Jun. 28, 2015 | |
| Notes to Financial Statements [Abstract] | |
| Income Taxes |
Note 3 — Income Taxes
The Company estimates its annual effective income tax rate for continuing operations to be approximately 19% for fiscal 2015, which is greater than its 14% effective income tax rate for fiscal 2014. Tax benefits from foreign income taxed at rates lower than rates in the United States are expected to be approximately 19% in fiscal 2015, compared to 20% in fiscal 2014.
The effective tax rate of 15% for the third quarter of fiscal 2015 was less than the estimated annual effective tax rate of 19% primarily resulting from an increase in the allocation of expenses to the Company’s United States operations.
During the second quarter of fiscal 2015, the NDRC imposed a $975 million fine on the Company (Note 2). The fine is not deductible for tax purposes. Given the significant unusual nature of the fine, it was accounted for discretely in the second quarter of fiscal 2015. Also, during the second quarter of fiscal 2015, the Company recorded a $61 million tax benefit as a result of a favorable tax audit settlement with the Internal Revenue Service related to Qualcomm Atheros, Inc.’s pre-acquisition 2010 and 2011 tax returns.
During the first quarter of fiscal 2015, the United States government reinstated the federal research and development tax credit retroactively to January 1, 2014 through December 31, 2014. As a result of the reinstatement, the Company recorded a tax benefit of $101 million related to fiscal 2014 in the first quarter of fiscal 2015. Additionally, the estimated annual effective tax rate for fiscal 2015 reflects the United States federal research and development tax credit generated through December 31, 2014, the date on which the credit expired. The annual effective tax rate for fiscal 2014 reflected the tax benefit from the credit generated through December 31, 2013, the date on which the credit previously expired.
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