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Income Taxes | 12 Months Ended
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Sep. 03, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Our income tax (provision) benefit consisted of the following:
For the year ended | 2020 | 2019 | 2018
Income (loss) before income taxes, net income (loss) attributable to noncontrolling interests, and equity in net income (loss) of equity method investees |  |  |
U.S. | $ | 308 |  | $ | (67) |  | $ | 141 |
Foreign | 2,675 |  | 7,115 |  | 14,166 |
| $ | 2,983 |  | $ | 7,048 |  | $ | 14,307 |
Income tax (provision) benefit |  |  |
Current |  |  |
U.S. federal | $ | (20) |  | $ | (36) |  | $ | (54) |
State | (2) |  | (2) |  | 1 |
Foreign | (148) |  | (319) |  | (374) |
| (170) |  | (357) |  | (427) |
Deferred |  |  |
U.S. federal | 39 |  | (146) |  | 232 |
State | 23 |  | 91 |  | 101 |
Foreign | (172) |  | (281) |  | (74) |
| (110) |  | $ | (336) |  | 259 |
Income tax (provision) benefit | $ | (280) |  | $ | (693) |  | $ | (168) |
On December 22, 2017, the United States enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which imposed a one-time transition tax in 2018 (the “Repatriation Tax”) and, beginning in 2019, created a new minimum tax on certain foreign earnings (the “Foreign Minimum Tax”). We recognize the Foreign Minimum Tax in the period the tax is incurred. Pursuant to SEC Staff Accounting Bulletin No. 118, measurement period adjustments in 2019 included $47 million of benefit for the Repatriation Tax, net of adjustments related to uncertain tax positions. Provisional estimates in 2018 included $1.34 billion of benefit for the release of the valuation allowance on the net deferred tax assets of our U.S. operations and $1.03 billion of provision for the Repatriation Tax, net of adjustments related to uncertain tax positions. The table below reconciles our tax (provision) benefit based on the U.S. federal statutory rate to our effective rate:
For the year ended | 2020 |  | 2019 |  | 2018 |
U.S. federal income tax (provision) benefit at statutory rate | $ | (626) |  | 21.0 | % | $ | (1,480) |  | 21.0 | % | $ | (3,677) |  | 25.7 | %
Change in unrecognized tax benefits | (33) |  | 1.1 | % | (59) |  | 0.8 | % | 60 |  | (0.4) | %
Change in valuation allowance | (20) |  | 0.7 | % | (40) |  | 0.6 | % | 2,079 |  | (14.5) | %
U.S. tax on foreign operations | (14) |  | 0.5 | % | (327) |  | 4.6 | % | (20) |  | 0.1 | %
Foreign tax rate differential | 253 |  | (8.5) | % | 993 |  | (14.1) | % | 2,606 |  | (18.2) | %
Foreign derived intangible income deduction | 67 |  | (2.2) | % | — |  | — | % | — |  | — | %
Research and development tax credits | 62 |  | (2.1) | % | 92 |  | (1.3) | % | 67 |  | (0.5) | %
State taxes, net of federal benefit | 23 |  | (0.8) | % | 102 |  | (1.4) | % | (84) |  | 0.6 | %
Repatriation Tax related to the Tax Act | — |  | — | % | (10) |  | 0.1 | % | (1,049) |  | 7.3 | %
Remeasurement of deferred tax assets and liabilities related to the Tax Act | — |  | — | % | — |  | — | % | (179) |  | 1.3 | %
Other | 8 |  | (0.3) | % | 36 |  | (0.5) | % | 29 |  | (0.2) | %
Income tax (provision) benefit | $ | (280) |  | 9.4 | % | $ | (693) |  | 9.8 | % | $ | (168) |  | 1.2 | %
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. These arrangements expire in whole or in part at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds. The effect of tax incentive arrangements reduced our tax provision by $215 million (benefiting our diluted earnings per share by $0.19) for 2020, by $756 million ($0.66 per diluted share) for 2019, and by $1.96 billion ($1.59 per diluted share) for 2018. As of September 3, 2020, certain non-U.S. subsidiaries had cumulative undistributed earnings of $2.70 billion that were deemed to be indefinitely reinvested. A provision has not been recognized to the extent that distributions from such subsidiaries are subject to additional foreign withholding or state income tax. Determination of the amount of unrecognized deferred tax liabilities related to investments in these foreign subsidiaries is not practicable. Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes as well as carryforwards. Deferred tax assets and liabilities consist of the following:
As of | 2020 | 2019
Deferred tax assets |  |
Net operating loss and tax credit carryforwards | $ | 912 |  | $ | 1,045 |
Accrued salaries, wages, and benefits | 176 |  | 122 |
Operating lease liabilities | 114 |  | — |
Property, plant, and equipment | — |  | 80 |
Other | 91 |  | 110 |
Gross deferred tax assets | 1,293 |  | 1,357 |
Less valuation allowance | (294) |  | (277) |
Deferred tax assets, net of valuation allowance | 999 |  | 1,080 |
Deferred tax liabilities |  |
Right-of-use assets | (95) |  | — |
Product and process technology | (57) |  | (138) |
Property, plant, and equipment | (50) |  | — |
Other | (99) |  | (109) |
Deferred tax liabilities | (301) |  | (247) |
Net deferred tax assets | $ | 698 |  | $ | 833 |
Reported as |  |
Deferred tax assets | $ | 707 |  | $ | 837 |
Deferred tax liabilities (included in other noncurrent liabilities) | (9) |  | (4) |
Net deferred tax assets | $ | 698 |  | $ | 833 |
We assess positive and negative evidence for each jurisdiction to determine whether it is more likely than not that existing deferred tax assets will be realized. As of September 3, 2020, and August 29, 2019, we had a valuation allowance of $294 million and $277 million, respectively, against our net deferred tax assets, primarily related to net operating loss carryforwards in Japan. Changes in 2020 in the valuation allowance were due to adjustments based on management’s assessment of tax credits and net operating losses that are more likely than not to be realized. As of September 3, 2020, our net operating loss carryforward amounts and expiration periods, as reported to tax authorities, were as follows:
Year of Expiration | State | Japan | Singapore | Other | Total
2021 - 2025 | $ | 49 |  | $ | 1,224 |  | $ | — |  | $ | 20 |  | $ | 1,293 |
2026 - 2030 | 313 |  | 84 |  | — |  | 10 |  | 407 |
2031 - 2035 | 337 |  | — |  | — |  | 1 |  | 338 |
2036 - 2040 | 30 |  | — |  | — |  | — |  | 30 |
Indefinite | 1 |  | — |  | 621 |  | 119 |  | 741 |
| $ | 730 |  | $ | 1,308 |  | $ | 621 |  | $ | 150 |  | $ | 2,809 |
As of September 3, 2020, our federal and state tax credit carryforward amounts and expiration periods, as reported to tax authorities, were as follows:
Year of Tax Credit Expiration | U.S. Federal | State | Total
2021 - 2025 | $ | — |  | $ | 43 |  | $ | 43 |
2026 - 2030 | — |  | 71 |  | 71 |
2031 - 2035 | — |  | 131 |  | 131 |
2036 - 2040 | 321 |  | 4 |  | 325 |
Indefinite | — |  | 81 |  | 81 |
| $ | 321 |  | $ | 330 |  | $ | 651 |
Below is a reconciliation of the beginning and ending amount of our unrecognized tax benefits:
For the year ended | 2020 | 2019 | 2018
Beginning unrecognized tax benefits | $ | 383 |  | $ | 261 |  | $ | 327 |
Increases related to tax positions from prior years | 14 |  | 124 |  | — |
Increases related to tax positions taken in current year | 27 |  | 44 |  | 68 |
Decreases related to tax positions from prior years | (13) |  | (46) |  | (126) |
Settlements with tax authorities | — |  | — |  | (8) |
Ending unrecognized tax benefits | $ | 411 |  | $ | 383 |  | $ | 261 |
As of September 3, 2020, gross unrecognized tax benefits were $411 million, substantially all of which would affect our effective tax rate in the future, if recognized. Amounts accrued for interest and penalties related to uncertain tax positions were not material for any period presented. The resolution of tax audits or expiration of statute of limitations could also reduce our unrecognized tax benefits. Although the timing of final resolution is uncertain, the estimated potential reduction in our unrecognized tax benefits in the next 12 months would not be material. We and our subsidiaries file income tax returns with the U.S. federal government, various U.S. states, and various foreign jurisdictions throughout the world. We regularly engage in discussions and negotiations with tax authorities regarding tax matters, including transfer pricing, and we continue to defend any and all such claims presented. Our U.S. federal and state tax returns remain open to examination for 2016 through 2020. In addition, tax returns that remain open to examination in Japan range from the years 2014 to 2020 and in Singapore and Taiwan from 2015 to 2020. We believe that adequate amounts of taxes and related interest and penalties have been provided, and any adjustments as a result of examinations are not expected to materially adversely affect our business, results of operations, or financial condition.

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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://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
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