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Income Taxes (Tables)

12 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of income from continuing operations before income taxes

	Years Ended March 31,
(In millions)	2018				2017				2016
Income from continuing operations before income taxes
U.S.	$	1,175			$	5,772			$	2,319
Foreign	(936		)		1,119				931
Total income from continuing operations before income taxes	$	239			$	6,891			$	3,250

Schedule of income tax expense related to continuing operations

Income tax expense related to continuing operations consists of the following:

	Years Ended March 31,
(In millions)	2018				2017				2016
Current
Federal	$	577			$	524			$	658
State	33				86				96
Foreign	205				122				90
Total current	815				732				844
Deferred
Federal	(767		)		767				95
State	17				164				42
Foreign	(118		)		(49		)		(73		)
Total deferred	(868		)		882				64
Income tax (benefit) expense	$	(53	)		$	1,614			$	908

Schedule of reconciliation between effective tax rate on income from continuing operations and statutory tax rate

The reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 31.6% for 2018 and 35% for 2017 and 2016 to the income before income taxes is as follows:

	Years Ended March 31,
(In millions)	2018				2017				2016
Income tax expense at federal statutory rate	$	75			$	2,411			$	1,137
State income taxes net of federal tax benefit	50				153				92
Tax effect of foreign operations	(146		)		(326		)		(295		)
Unrecognized tax benefits and settlements	454				57				(14		)
Non-deductible goodwill	585				106				—
Share-based compensation	(8		)		(54		)		—
Net tax benefit on intellectual property transfer	(178		)		(137		)		—
Rate differential on gain from Change Healthcare Net Asset Exchange	—				(587		)		—
Remeasurement of U.S. deferred taxes	(1,324		)		—				—
Transition tax on foreign earnings	457				—				—
Other, net (1)	(18		)		(9		)		(12		)
Income tax (benefit) expense	$	(53	)		$	1,614			$	908

(1) Our 2018 effective tax rate was impacted by other favorable U.S. federal permanent differences including research and development credits of $11 million.

Schedule of deferred tax balances

Deferred tax balances consisted of the following:

	March 31,
(In millions)	2018				2017
Assets
Receivable allowances	$	58			$	124
Compensation and benefit related accruals	345				593
Net operating loss and credit carryforwards	811				594
Long-term contractual obligations	59				107
Other	279				241
Subtotal	1,552				1,659
Less: valuation allowance	(751		)		(503		)
Total assets	801				1,156
Liabilities
Inventory valuation and other assets	(1,869		)		(2,818		)
Fixed assets and systems development costs	(158		)		(224		)
Intangibles	(644		)		(921		)
Change Healthcare Equity Investment	(814		)		(773		)
Other	(71		)		(70		)
Total liabilities	(3,556		)		(4,806		)
Net deferred tax liability	$	(2,755	)		$	(3,650	)
Long-term deferred tax asset	49				28
Long-term deferred tax liability	(2,804		)		(3,678		)
Net deferred tax liability	$	(2,755	)		$	(3,650	)

Schedule of gross unrecognized tax benefits

The following table summarizes the activity related to our gross unrecognized tax benefits for the last three years:

	Years Ended March 31,
(In millions)	2018				2017				2016
Unrecognized tax benefits at beginning of period	$	486			$	555			$	616
Additions based on tax positions related to prior years	47				7				116
Reductions based on tax positions related to prior years	(124		)		(67		)		(62		)
Additions based on tax positions related to current year	778				105				28
Reductions based on settlements	(7		)		(113		)		(141		)
Reductions based on the lapse of the applicable statutes of limitations	—				—				(6		)
Exchange rate fluctuations	3				(1		)		4
Unrecognized tax benefits at end of period	$	1,183			$	486			$	555

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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-Publisher FASB
-Name Accounting Standards Codification
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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months.

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