Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.20.2
Income Taxes (Tables)
 12 Months Ended
Sep. 27, 2020
Income Tax Disclosure [Abstract]  
Components of Income Tax Expense (Benefit)
The components of the income tax provision were as follows (in millions):
2020 2019 2018
Current provision (benefit):      
Federal $ 210  $ 1,563  $ 2,559 
State 1  2  (1)
Foreign 526  (407) 777 
737  1,158  3,335 
Deferred provision (benefit):      
Federal (192) 2,037  1,846 
State 2  17  1 
Foreign (26) (117) 174 
(216) 1,937  2,021 
$ 521  $ 3,095  $ 5,356 
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):
2020 2019 2018
United States $ 5,004  $ 7,042  $ (1,834)
Foreign 715  439  2,226 
$ 5,719  $ 7,481  $ 392 
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, except percentages):
2020 2019 2018
Expected income tax provision at federal statutory tax rate $ 1,201  $ 1,571  $ 97 
State income tax provision, net of federal benefit 7  10  2 
Benefit from foreign-derived intangible income (FDII) deduction (381) (419) — 
Benefit related to research and development tax credits (125) (110) (136)
Excess tax benefit associated with share-based awards (83) (27) (20)
Benefit from foreign income taxed at other than U.S. rates (11) (54) (834)
Derecognition of deferred tax asset on distributed intellectual property —  2,472  — 
Benefit from establishing new U.S. net deferred tax assets —  (570) — 
Nondeductible charges (reversals) related to the EC, KFTC and TFTC investigations —  51  (119)
Toll Charge from U.S. tax reform —  —  5,236 
Valuation allowance on deferred tax assets related to the NXP termination fee —  —  494 
Remeasurement of deferred taxes due to changes in the statutory rate due to U.S. tax reform —  —  443 
Other (87) 171  193 
$ 521  $ 3,095  $ 5,356 
Effective tax rate 9  % 41  % N/M
Deferred Tax Assets and Liabilities
We had deferred tax assets and deferred tax liabilities as follows (in millions):
September 27,
2020		 September 29,
2019
Unused tax credits $ 1,311  $ 1,137 
Accrued liabilities and reserves 812  648 
Unused net operating losses 576  619 
Unearned revenues 262  376 
Unrealized losses on other investments and marketable securities 235  164 
Share-based compensation 151  115 
Operating lease liabilities 107  — 
Other 141  144 
Total gross deferred tax assets 3,595  3,203 
Valuation allowance (1,728) (1,672)
Total net deferred tax assets 1,867  1,531 
Intangible assets (181) (216)
Property, plant and equipment (162) (102)
Operating lease assets (100) — 
Unrealized gains on other investments and marketable securities (97) (99)
Other (32) (21)
Total deferred tax liabilities (572) (438)
Net deferred tax assets $ 1,295  $ 1,093 
Reported as:    
Non-current deferred tax assets $ 1,351  $ 1,196 
        Non-current deferred tax liabilities (1) (56) (103)
$ 1,295  $ 1,093 
(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 2020, 2019 and 2018 follows (in millions):
2020 2019 2018
Beginning balance of unrecognized tax benefits $ 1,705  $ 217  $ 372 
Additions based on prior year tax positions 20  1,238  7 
Reductions for prior year tax positions and lapse in statute of limitations (2) (3) (11)
Additions for current year tax positions 192  253  18 
Settlements with taxing authorities (14) —  (169)
Ending balance of unrecognized tax benefits $ 1,901  $ 1,705  $ 217