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. 30, 2018

Components of Income Tax Expense (Benefit)

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



	2018			2017			2016
Current provision (benefit):
Federal	$	2,559		$	72		$	4
State	(1		)	3			4
Foreign	777			1,256			1,411
	3,335			1,331			1,419
Deferred provision (benefit):
Federal	1,867			(586		)	(184		)
State	1			4			6
Foreign	174			(194		)	(110		)
	2,042			(776		)	(288		)
	$	5,377		$	555		$	1,131

Income before Income Tax, Domestic and Foreign

The components of income before income taxes by U.S. and foreign jurisdictions were as follows (in millions):



	2018			2017			2016
United States	$	(1,713	)	$	(762	)	$	3,032
Foreign	2,226			3,782			3,801
	$	513		$	3,020		$	6,833

Effective Income Tax Rate Reconciliation

The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision (in millions):



	2018			2017			2016
Expected income tax provision at federal statutory tax rate	$	127		$	1,057		$	2,392
State income tax provision, net of federal benefit	2			8			19
Toll Charge from U.S. tax reform	5,236			—			—
Benefits from foreign income taxed at other than U.S. rates	(834		)	(963		)	(1,068		)
Valuation allowance on deferred tax assets related to NXP termination fee (Note 9)	494			—			—
Remeasurement of deferred taxes due to changes in statutory rate due to U.S. tax reform	438			—			—
Benefits related to research and development tax credits	(136		)	(81		)	(143		)
Nondeductible charges and reversals related to the EC, KFTC and TFTC investigations	(119		)	363			—
Taxes on undistributed foreign earnings	87			—			—
Impact of changes in tax reserves and audit settlements for prior year tax positions	—			111			—
Worthless stock deduction of domestic subsidiary	—			—			(101		)
Other	82			60			32
	$	5,377		$	555		$	1,131

Summary of Income Tax Holiday

Without these tax incentives, our income tax expense would have been higher and impacted earnings (loss) per share attributable to Qualcomm as follows (in millions, except per share amounts):



	2018		2017		2016
Additional income tax expense	$	652	$	493	$	487
Reduction to diluted earnings (loss) per share	0.45		0.33		0.32

Deferred Tax Assets and Liabilities

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



	September 30, 2018			September 24, 2017
Unused tax credits	$	1,044		$	1,798
Unused net operating losses	696			208
Unearned revenues	446			886
Accrued liabilities and reserves	396			888
Unrealized losses on other investments and marketable securities	126			151
Share-based compensation	97			241
Other	26			21
Total gross deferred tax assets	2,831			4,193
Valuation allowance	(1,529		)	(863		)
Total net deferred tax assets	1,302			3,330
Intangible assets	(322		)	(535		)
Accrued revenues	(202		)	—
Accrued withholding taxes	(90		)	—
Unrealized gains on other investments and marketable securities	(26		)	(33		)
Other	(49		)	(95		)
Total deferred tax liabilities	(689		)	(663		)
Net deferred tax assets	$	613		$	2,667
Reported as:
Non-current deferred tax assets	$	904		$	2,900
Non-current deferred tax liabilities (1)	(291		)	(233		)
	$	613		$	2,667


(1)	Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.

Unrecognized Tax Benefits Roll Forward

A summary of the changes in the amount of unrecognized tax benefits for fiscal 2018, 2017 and 2016 follows (in millions):



	2018			2017			2016
Beginning balance of unrecognized tax benefits	$	372		$	271		$	40
Additions based on prior year tax positions	7			92			20
Reductions for prior year tax positions and lapse in statute of limitations	(11		)	(11		)	(6		)
Additions for current year tax positions	18			23			218
Settlements with taxing authorities	(169		)	(3		)	(1		)
Ending balance of unrecognized tax benefits	$	217		$	372		$	271