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Income Taxes
 9 Months Ended
Oct. 02, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The worldwide effective income tax rates for the fiscal nine months of 2022 and 2021 were 17.7% and 10.0%, respectively. This increase in the consolidated tax rate as compared to the prior year fiscal nine months is primarily due to the Company reorganizing the ownership structure of certain wholly-owned international subsidiaries in the second fiscal quarter of 2021. As part of this reorganization, the Company increased the tax basis of certain assets to fair value in accordance with the applicable local regulations. Accordingly, the Company recorded a local deferred tax benefit of approximately $2.3 billion which was partially offset by a related increase in the U.S. GILTI deferred tax liability of approximately $1.7 billion. The net impact of this reorganization was an approximate $0.6 billion net benefit or a 3.4% decrease to the effective tax rate of the fiscal nine months of 2021.

Additionally, the following items had an unfavorable impact to the Company’s year-to-date effective tax rate as compared to the same period in the prior fiscal year:
•as part of the planned separation of the Company’s Consumer Health business (for further information see Note 1 in the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2022) the Company has recognized approximately $0.4 billion in net incremental tax costs which increased the rate by approximately 2.0% for the fiscal nine months of 2022
•certain one-time favorable tax items that occurred during the fiscal nine months of 2021 and resulted in an approximate 1.0% benefit to the effective tax rate, but were not repeated in fiscal 2022
•In the fiscal third quarter of 2021 the Company had accrued additional Talc expenses of $1.4 billion at an effective tax rate of 23.5% and $0.8 billion for the Risperdal Gynecomastia settlement at an effective tax rate of 16.4%. (See note 11 to the Consolidated Financial Statements for more details)
•in the fiscal third quarter of 2021 the Company recorded a partial IPR&D charge of $0.9 billion for the Ottava intangible asset (acquired with the Auris Health acquisition in 2019) at an effective rate of 22.4%

The Company also had additional tax benefits received from stock-based compensation that were either exercised or vested during the first three fiscal quarters of 2022 and 2021. The Company’s 2022 tax rate benefited primarily from certain provisions of the Tax Cuts and Jobs Act of 2017 that became effective in fiscal 2022, the impairment of bermekimab for AD IPR&D (for further information see Note 3 of the Consolidated Financial Statements) and changes in the fair value of securities in the Company’s investment portfolio, both recorded at the U.S. statutory rate.

As of October 2, 2022, the Company had approximately $3.8 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 2012 and is currently auditing tax years 2013 through 2016. In other major jurisdictions where the Company conducts business, the years that remain open to tax audit go back to the year 2008. 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.