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Income Taxes | 6 Months Ended
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Jun. 28, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The worldwide effective income tax rates for the fiscal six months of 2020 and 2019 were 9.8% an d 18.4%, respectively. In the third fiscal quarter of 2019, Switzerland enacted the Federal Act on Tax Reform and AHV Financing (TRAF), which became effective on January 1, 2020. More information on the provisions of TRAF, including the step-up transitional provisions, can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019. During the first fiscal quarter of 2020, the final canton where the Company maintains significant operations enacted TRAF legislation and, accordingly, the Company recorded an estimated deferred tax benefit of approximately $0.3 billion for the remeasurement of existing deferred tax liabilities offset by a related $0.2 billion increase in U.S. GILTI deferred taxes. During the second fiscal quarter of 2020, the Company received rulings from the Swiss Federal and cantonal tax authorities in the remaining jurisdictions where it has significant operations. These rulings resulted in the Company revising its estimate on the tax basis adjustment (i.e., “step-up”) for its assets. As a result, the Company recorded additional deferred tax benefits in the second fiscal quarter of 2020 to recognize this step-up. Consequently, the benefit recorded related to Swiss Tax reform in the first six months of fiscal 2020 was approximately $0.4 billion, or 3.8% benefit to the Company’s fiscal six months effective tax rate, inclusive of the impact of U.S. GILTI deferred taxes. The Company does not expect to receive future rulings regarding the transitional provisions of TRAF. During the second fiscal quarter of 2020, the Company reversed some of its international unrecognized tax benefits due to the completion of several years of tax examinations in certain jurisdictions. This reserve reversal benefited the Company’s effective tax rate by approximately 1.0% for the first fiscal six months of fiscal 2020. In the first fiscal quarter of 2020, the Company reduced a contingent consideration liability related to the 2019 Auris Health acquisition that has benefited the year to date overall effective tax rate by approximately 1.0% (see Note 10 to the Consolidated Financial Statements for more details.) Additionally, the Company had less income in higher tax jurisdictions relative to lower tax jurisdictions as compared to the same period in the prior fiscal year primarily due to: •the 2019 divestiture gain related to Advanced Sterilization Products (ASP) which was primarily taxed in the U.S. •the accrual of additional legal costs, at the U.S. statutory rate, in the second fiscal quarter of 2020 (see Notes 9 and 11 to the Consolidated Financial Statements for more details) partially offset by: •the reduced income in lower tax jurisdictions due to the ongoing COVID-19 pandemic. The Company also generated additional tax benefits from stock-based compensation that were either exercised or vested during the first and second fiscal quarters. As of June 28, 2020, the Company had approximately $3.1 billion of liabilities from unrecognized tax benefits. The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of jurisdictions. With respect to the United States, the IRS has completed its audit for the tax years through 2009 and is currently auditing the tax years 2010 through 2012. The Company currently expects completion of this audit and settlement of the related tax liabilities in the fiscal year 2020. As of June 28, 2020, the Company has classified unrecognized tax benefits and related interest of approximately $0.2 billion as a current liability on the “Accrued taxes on Income” line of the Consolidated Balance Sheet. This is the amount expected to be paid over the next 12 months with respect to the IRS audit. During the first fiscal quarter of 2020, the Company made a payment of approximately $0.6 billion to the U.S. Treasury with respect to the 2010-2012 tax audit in anticipation of a final settlement later in the fiscal year 2020. The completion of this tax audit may result in additional adjustments to the Company’s unrecognized tax benefit liability. In other major jurisdictions where the Company conducts business, the years that remain open to tax audit go back to the year 2006. The Company believes it is possible that tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions outside of the United States. However, the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments relating to uncertain tax positions.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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