QUALCOMM Incorporated Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Sep. 25, 2016

Components of Income Tax Expense (Benefit)

The components of the income tax provision for continuing operations were as follows (in millions):



	2016			2015			2014
Current provision (benefit):
Federal	$	4		$	(67	)	$	172
State	4			4			10
Foreign	1,411			1,307			1,116
	1,419			1,244			1,298
Deferred (benefit) provision:
Federal	(184		)	(9		)	(30		)
State	6			1			(10		)
Foreign	(110		)	(17		)	(14		)
	(288		)	(25		)	(54		)
	$	1,131		$	1,219		$	1,244

Income before Income Tax, Domestic and Foreign

The components of income from continuing operations before income taxes by United States and foreign jurisdictions were as follows (in millions):



	2016		2015		2014
United States	$	3,032	$	2,993	$	3,213
Foreign	3,801		3,494		5,565
	$	6,833	$	6,487	$	8,778

Effective Income Tax Rate Reconciliation

The following is a reconciliation of the expected statutory federal income tax provision to the Company’s actual income tax provision for continuing operations (in millions):



	2016			2015			2014
Expected income tax provision at federal statutory tax rate	$	2,392		$	2,270		$	3,072
State income tax provision, net of federal benefit	19			18			24
Foreign income taxed at other than U.S. rates	(1,068		)	(937		)	(1,750		)
Research and development tax credits	(143		)	(148		)	(61		)
Worthless stock deduction of domestic subsidiary	(101		)	—			—
Other	32			16			(41		)
	$	1,131		$	1,219		$	1,244

Summary of Income Tax Holiday

Had the Company established QCT’s non-United States headquarters in Singapore without these tax incentives, the Company’s income tax expense would have been higher and impacted earnings per share attributable to Qualcomm as follows (in millions, except per share amounts):



	2016		2015		2014
Additional income tax expense	$	487	$	656	$	690
Reduction to diluted earnings per share	$	0.32	$	0.40	$	0.40

Deferred Tax Assets and Liabilities

The Company had deferred tax assets and deferred tax liabilities as follows (in millions):



	September 25, 2016			September 27, 2015
Unused tax credits	$	1,256		$	897
Unearned revenues	920			1,029
Unrealized losses on marketable securities	493			441
Accrued liabilities and reserves	409			317
Share-based compensation	277			331
Unused net operating losses	218			265
Other	107			95
Total gross deferred tax assets	3,680			3,375
Valuation allowance	(754		)	(635		)
Total net deferred tax assets	2,926			2,740
Intangible assets	(502		)	(548		)
Unrealized gains on marketable securities	(430		)	(273		)
Other	(133		)	(105		)
Total deferred tax liabilities	(1,065		)	(926		)
Net deferred tax assets	$	1,861		$	1,814
Reported as:
Current deferred tax assets	$	—		$	635
Non-current deferred tax assets	2,030			1,453
Current deferred tax liabilities (1)	—			(4		)
Non-current deferred tax liabilities (1)	(169		)	(270		)
	$	1,861		$	1,814


(1)	Current deferred tax liabilities and non-current deferred tax liabilities were included in other current liabilities and other liabilities, respectively, in the consolidated balance sheets.

Unrecognized Tax Benefits Roll Forward

A summary of the changes in the amount of unrecognized tax benefits for fiscal 2016, 2015 and 2014 follows (in millions):



	2016			2015			2014
Beginning balance of unrecognized tax benefits	$	40		$	87		$	221
Additions based on prior year tax positions	20			31			1
Reductions for prior year tax positions and lapse in statute of limitations	(6		)	(70		)	(67		)
Additions for current year tax positions	218			5			5
Settlements with taxing authorities	(1		)	(13		)	(73		)
Ending balance of unrecognized tax benefits	$	271		$	40		$	87