XML 29 R12.htm IDEA: XBRL DOCUMENT
v3.20.2

Income Taxes | 12 Months Ended
--- | ---
Sep. 26, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes U.S. Tax Cuts and Jobs Act On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income. The Act also created a new minimum tax on certain foreign earnings, for which the Company has elected to record certain deferred tax assets and liabilities. Provision for Income Taxes and Effective Tax Rate The provision for income taxes for 2020, 2019 and 2018, consisted of the following (in millions):
| 2020 |  | 2019 |  | 2018
Federal: |  |  |  |  |
Current | $ | 6,306 |  |  | $ | 6,384 |  |  | $ | 41,425 |
Deferred | (3,619) |  |  | (2,939) |  |  | (33,819) |
Total | 2,687 |  |  | 3,445 |  |  | 7,606 |
State: |  |  |  |  |
Current | 455 |  |  | 475 |  |  | 551 |
Deferred | 21 |  |  | (67) |  |  | 48 |
Total | 476 |  |  | 408 |  |  | 599 |
Foreign: |  |  |  |  |
Current | 3,134 |  |  | 3,962 |  |  | 3,986 |
Deferred | 3,383 |  |  | 2,666 |  |  | 1,181 |
Total | 6,517 |  |  | 6,628 |  |  | 5,167 |
Provision for income taxes | $ | 9,680 |  |  | $ | 10,481 |  |  | $ | 13,372 |
The foreign provision for income taxes is based on foreign pre-tax earnings of $38.1 billion, $44.3 billion and $48.0 billion in 2020, 2019 and 2018, respectively. A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (21% in 2020 and 2019; 24.5% in 2018) to income before provision for income taxes for 2020, 2019 and 2018, is as follows (dollars in millions):
| 2020 |  | 2019 |  | 2018
Computed expected tax | $ | 14,089 |  |  | $ | 13,805 |  |  | $ | 17,890 |
State taxes, net of federal effect | 423 |  |  | 423 |  |  | 271 |
Impacts of the Act | (582) |  |  | — |  |  | 1,515 |
Earnings of foreign subsidiaries | (2,534) |  |  | (2,625) |  |  | (5,606) |
Research and development credit, net | (728) |  |  | (548) |  |  | (560) |
Excess tax benefits from equity awards | (930) |  |  | (639) |  |  | (675) |
Other | (58) |  |  | 65 |  |  | 537 |
Provision for income taxes | $ | 9,680 |  |  | $ | 10,481 |  |  | $ | 13,372 |
Effective tax rate | 14.4 | % |  | 15.9 | % |  | 18.3 | %
Deferred Tax Assets and Liabilities As of September 26, 2020 and September 28, 2019, the significant components of the Company’s deferred tax assets and liabilities were (in millions):
| 2020 |  | 2019
Deferred tax assets: |  |  |
Amortization and depreciation | $ | 8,317 |  |  | $ | 11,645 |
Accrued liabilities and other reserves | 4,934 |  |  | 5,196 |
Lease liabilities | 2,038 |  |  | — |
Deferred revenue | 1,638 |  |  | 1,372 |
Other | 2,409 |  |  | 2,174 |
Total deferred tax assets | 19,336 |  |  | 20,387 |
Less: Valuation allowance | (1,041) |  |  | (747) |
Total deferred tax assets, net | 18,295 |  |  | 19,640 |
Deferred tax liabilities: |  |  |
Minimum tax on foreign earnings | 7,045 |  |  | 10,809 |
Right-of-use assets | 1,862 |  |  | — |
Unrealized gains | 526 |  |  | 186 |
Other | 705 |  |  | 600 |
Total deferred tax liabilities | 10,138 |  |  | 11,595 |
Net deferred tax assets | $ | 8,157 |  |  | $ | 8,045 |
Deferred tax assets and liabilities reflect the effects of tax credits and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Uncertain Tax Positions As of September 26, 2020, the total amount of gross unrecognized tax benefits was $16.5 billion, of which $8.8 billion, if recognized, would impact the Company’s effective tax rate. As of September 28, 2019, the total amount of gross unrecognized tax benefits was $15.6 billion, of which $8.6 billion, if recognized, would have impacted the Company’s effective tax rate. The aggregate change in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2020, 2019 and 2018, is as follows (in millions):
| 2020 |  | 2019 |  | 2018
Beginning balances | $ | 15,619 |  |  | $ | 9,694 |  |  | $ | 8,407 |
Increases related to tax positions taken during a prior year | 454 |  |  | 5,845 |  |  | 2,431 |
Decreases related to tax positions taken during a prior year | (791) |  |  | (686) |  |  | (2,212) |
Increases related to tax positions taken during the current year | 1,347 |  |  | 1,697 |  |  | 1,824 |
Decreases related to settlements with taxing authorities | (85) |  |  | (852) |  |  | (756) |
Decreases related to expiration of the statute of limitations | (69) |  |  | (79) |  |  | — |
Ending balances | $ | 16,475 |  |  | $ | 15,619 |  |  | $ | 9,694 |
The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and many state and foreign jurisdictions. The U.S. Internal Revenue Service (the “IRS”) concluded its review of the years 2013 through 2015 in 2018, and all years before 2016 are closed. Tax years after 2014 remain open in certain major foreign jurisdictions and are subject to examination by the taxing authorities. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although the timing of resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease in the next 12 months by as much as $3.9 billion. Interest and Penalties The Company includes interest and penalties related to income tax matters within the provision for income taxes. As of September 26, 2020 and September 28, 2019, the total amount of gross interest and penalties accrued was $1.4 billion and $1.3 billion, respectively. The Company recognized interest and penalty expense in 2020, 2019 and 2018 of $85 million, $73 million and $489 million, respectively. European Commission State Aid Decision On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”). The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward. The recovery amount was calculated to be €13.1 billion, plus interest of €1.2 billion. The Company and Ireland appealed the State Aid Decision to the General Court of the Court of Justice of the European Union (the “General Court”). On July 15, 2020, the General Court annulled the State Aid Decision. On September 25, 2020, the European Commission appealed the General Court’s decision to the European Court of Justice. The Company believes that any incremental Irish corporate income taxes potentially due related to the State Aid Decision would be creditable against U.S. taxes, subject to any foreign tax credit limitations in the Act. On an annual basis, the Company may request approval from the Irish Minister for Finance to reduce the recovery amount for certain taxes paid to other countries. As of September 26, 2020, the adjusted recovery amount was €12.9 billion, excluding interest. The adjusted recovery amount plus interest is funded into escrow, where it will remain restricted from general use pending the conclusion of all legal proceedings. Refer to the Cash, Cash Equivalents and Marketable Securities section of Note 3, “Financial Instruments” for more information.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration