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Income Taxes | 12 Months Ended
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Nov. 02, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company’s effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where the Company’s income is earned. The reconciliation of income tax computed at the U.S. federal statutory rates to income tax expense for fiscal 2024, fiscal 2023 and fiscal 2022 is as follows:
| 2024 |  | 2023 |  | 2022
U.S. federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Income tax provision reconciliation: |  |  |  |  |
Tax at statutory rate | $ | 373,241 |  |  | $ | 757,681 |  |  | $ | 650,737 |
Net foreign income subject to lower tax rate | (219,294) |  |  | (358,944) |  |  | (358,725) |
State income taxes, net of federal benefit | (10,646) |  |  | 4,453 |  |  | (15,615) |
Valuation allowance | 10,615 |  |  | (6,641) |  |  | 29,737 |
Federal research and development tax credits | (53,420) |  |  | (65,391) |  |  | (58,625) |
Change in uncertain tax positions | (19,514) |  |  | 17,985 |  |  | 19,394 |
Amortization of purchased intangibles | 114,679 |  |  | 142,358 |  |  | 142,375 |
Taxes attributable to the Tax Cuts and Jobs Act of 2017 | (3,977) |  |  | (81,695) |  |  | — |
U.S. effects of international operations | (6,300) |  |  | (98,286) |  |  | (47,665) |
Windfalls (under ASU 2016-09) | (22,985) |  |  | (24,211) |  |  | (16,717) |
Other, net | (20,332) |  |  | 6,115 |  |  | 5,292 |
Total income tax provision | $ | 142,067 |  |  | $ | 293,424 |  |  | $ | 350,188 |
Income before income taxes for fiscal 2024, fiscal 2023 and fiscal 2022 includes the following components:
Income before income taxes (1) | 2024 |  | 2023 |  | 2022
Domestic | $ | 517,555 |  |  | $ | 846,592 |  |  | $ | 958,465 |
Foreign | 1,259,785 |  |  | 2,761,411 |  |  | 2,140,284 |
Income before income taxes | $ | 1,777,340 |  |  | $ | 3,608,003 |  |  | $ | 3,098,749 |
_______________________________________ (1)Income before income taxes reflects deemed intercompany royalties in all periods presented. The components of the provision for income taxes for fiscal 2024, fiscal 2023 and fiscal 2022 are as follows:
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal tax | $ | 348,144 |  |  | $ | 303,146 |  |  | $ | 304,556 |
State | 14,399 |  |  | 11,772 |  |  | 13,214 |
Foreign | 147,087 |  |  | 431,452 |  |  | 359,173 |
Total current | $ | 509,630 |  |  | $ | 746,370 |  |  | $ | 676,943 |
Deferred: |  |  |  |  |
Federal | $ | (492,578) |  |  | $ | (508,741) |  |  | $ | (341,777) |
State | 3,579 |  |  | 2,063 |  |  | (612) |
Foreign | 121,436 |  |  | 53,732 |  |  | 15,634 |
Total deferred | $ | (367,563) |  |  | $ | (452,946) |  |  | $ | (326,755) |
Provision for income tax | $ | 142,067 |  |  | $ | 293,424 |  |  | $ | 350,188 |
The Company’s effective tax rate for fiscal 2023 was impacted by a discrete income tax benefit recorded of $81.7 million resulting from the approval granted by the Joint Committee on Taxation of its federal corporate income tax relief claim which reduced the amount of transition tax owed under the Tax Cuts and Jobs Act. U.S. tax legislation subjects a U.S. shareholder to tax on global intangible low-taxed income (GILTI). Under U.S. GAAP, an accounting policy election can be made to either treat taxes due on the GILTI inclusion as a current period expense or to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years. The Company elected the deferral method and recorded the corresponding GILTI deferred tax assets and liabilities on its Consolidated Balance Sheets. The Company carries other outside basis differences in its subsidiaries, primarily arising from acquisition accounting adjustments and certain undistributed earnings that are considered indefinitely reinvested. As of November 2, 2024, the Company has not recognized deferred income tax on $33.6 billion of outside basis differences because of its intent and ability to indefinitely reinvest these basis differences. These basis differences could be reversed through a sale of the subsidiaries or the receipt of dividends from the subsidiaries, as well as various other events, none of which are considered probable at this time. Determination of the amount of unrecognized deferred income tax liability related to these outside basis differences is not practicable. The significant components of the Company’s deferred tax assets and liabilities for fiscal 2024 and fiscal 2023 are as follows:
| 2024 |  | 2023
Deferred tax assets: |  |  |
Inventory reserves | $ | 29,139 |  |  | $ | 20,159 |
Reserves for compensation and benefits | 48,801 |  |  | 57,603 |
Tax credit carryovers | 318,469 |  |  | 313,891 |
Stock-based compensation | 22,290 |  |  | 10,734 |
Net operating losses | 41,340 |  |  | 42,825 |
Intangible assets | 1,871,218 |  |  | 1,955,752 |
Lease liability | 74,715 |  |  | 82,305 |
Capitalization of R&D expenses (1) | 624,682 |  |  | 421,485 |
Other | 71,049 |  |  | 88,164 |
Total gross deferred tax assets | 3,101,703 |  |  | 2,992,918 |
Valuation allowance | (343,079) |  |  | (332,464) |
Total deferred tax assets | 2,758,624 |  |  | 2,660,454 |
Deferred tax liabilities: |  |  |
Depreciation | (139,556) |  |  | (122,125) |
Deferred GILTI tax liabilities | (2,442,068) |  |  | (2,654,817) |
Right of use asset | (53,303) |  |  | (60,343) |
Acquisition-related intangibles | (664,337) |  |  | (727,749) |
Total gross deferred tax liabilities | (3,299,264) |  |  | (3,565,034) |
Net deferred tax liabilities | $ | (540,640) |  |  | $ | (904,580) |
_______________________________________________ (1) The Company included the effects of the mandatory capitalization and amortization of research and development expenses which began in fiscal 2023 under the Tax Cuts and Jobs Act. The valuation allowances of $343.1 million and $332.5 million as of November 2, 2024 and October 28, 2023, respectively, are primarily for the Company’s state R&D credit carryforwards, foreign net operating losses and international credit carryforwards. The Company believes that it is more-likely-than-not that these credit carryovers will not be realized and as a result has recorded a partial valuation allowance. The federal and state net operating losses of $89.1 million will begin to expire in fiscal 2035 while foreign net operating loss carryovers of $145.5 million have no expiration date. There are also $304.8 million of federal and state credit carryovers and $13.7 million of foreign investment tax credit carryovers that begin to expire in the fiscal year ending October 31, 2026. As of November 2, 2024 and October 28, 2023, the Company had unrealized tax benefits, net of indirect tax benefits, of $162.7 million and $187.4 million, respectively, which if settled in the Company’s favor, would lower the Company’s effective tax rate in the period recorded. Liabilities for unrealized tax benefits are primarily classified as non-current because the Company believes that the ultimate payment or settlement of these liabilities will not occur within the next twelve months. As of November 2, 2024 and October 28, 2023, the Company had liabilities of approximately $73.7 million and $70.7 million, respectively, for interest and penalties, which is included within the provision for income taxes in the Consolidated Statements of Income. The following table summarizes the changes in the total amounts of unrealized tax benefits for fiscal 2022 through fiscal 2024:
| Unrealized Tax Benefits
Balance, October 30, 2021 | $ | 132,521 |
Additions for tax positions related to the Acquisition | 15,267 |
Additions for tax positions related to current year | 11,800 |
Additions for tax positions related to prior years | 9,704 |
Reductions due to lapse of applicable statute of limitations | (3,965) |
Balance, October 29, 2022 | $ | 165,327 |
Additions for tax positions related to current year | 5,895 |
Additions for tax positions related to prior years | 17,096 |
Reductions due to lapse of applicable statute of limitations | (903) |
Balance, October 28, 2023 | $ | 187,415 |
Additions for tax positions related to current year | 5,793 |
Reductions for tax positions related to prior years | (27,499) |
Reductions due to lapse of applicable statute of limitations | (3,013) |
Balance, November 2, 2024 | $ | 162,696 |
In fiscal 2024, the Company continued to engage in discussions with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that the balance of unrealized tax benefits, including accrued interest and penalties, could decrease by up to $140.0 million within the next twelve months due to the completion of federal tax audits, including any administrative appeals. The $140.0 million primarily relates to matters involving federal taxation of international income and cross-border transactions. The Company has numerous audits ongoing at any time throughout the world including: an IRS income tax audit for the fiscal years ended October 30, 2021 (fiscal 2021), November 2, 2019 (fiscal 2019) and November 3, 2018 (fiscal 2018); a pre-Acquisition IRS income tax audit for Maxim’s fiscal years ended June 27, 2015 through August 26, 2021; and various U.S. state and local tax audits and international audits, including an Irish corporate tax audit for fiscal 2019. The Company’s U.S. federal tax returns prior to fiscal 2018 are no longer subject to examination, except for the applicable Maxim pre-Acquisition fiscal years noted above.

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