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Income Taxes | 9 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Our reported income tax expense rates for the third quarter and first nine months of 2019 were 18.9% and 19.7% compared to income tax benefit rates of 37.7% and 3.5% for the third quarter and first nine months of 2018. Fluctuations in our reported income tax rates are primarily due to discrete items mainly driven by the impact of the 2017 Tax Act, the impact of nondeductible impairment charges, changes within our business mix of income and the effect of an intercompany sale of software. During the third quarter and first nine months of 2019, income tax expense related to continuing operations was $123 million and $245 million and included net discrete tax benefits of $31 million and $138 million. During the third quarter and first nine months of 2018, income tax benefit related to continuing operations was $263 million and $46 million and included net discrete tax benefits of $424 million and $420 million. Our discrete tax benefits for the third quarter of 2019 included $58 million of tax benefits primarily related to a change in a tax method for inventory rebates approved by the tax authorities during the quarter, partially offset by $27 million of tax expense related to the impact of the 2017 Tax Act. Our discrete tax benefits for the third quarter of 2018 included a provisional $370 million related to the impact of the 2017 Tax Act and other discrete tax benefits of $54 million primarily related to the conclusion of certain tax audits. During the first nine months of 2019, no tax benefit was recognized for the 2019 pre-tax charge of $591 million to impair the carrying value of goodwill for our two reporting units within the European Pharmaceutical Solutions segment and Rexall Health reporting unit. Refer to Financial Note 3, “Goodwill Impairment Charges,” within operating expenses in the accompanying condensed consolidated statement of operations. As of December 31, 2018, we had $1,010 million of unrecognized tax benefits, of which $843 million would reduce income tax expense and the effective tax rate, if recognized. During the third quarter and first nine months of 2019, we recognized a discrete tax expense of $17 million and a discrete tax benefit of $6 million for unrecognized tax benefits due to the issuance of new proposed tax regulations and the completion of our accounting for the impacts of the 2017 Tax Act. During the next twelve months, we do not anticipate a significant increase or decrease to our unrecognized tax benefits based on the information currently available. We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. We are subject to audit by the IRS for fiscal years 2013 through the current fiscal year. We are generally subject to audit by taxing authorities in various U.S. states and in foreign jurisdictions for fiscal years 2010 through the current fiscal year. 2017 Tax Act On December 22, 2017, the U.S. government enacted the 2017 Tax Act, which was comprehensive new tax legislation. The SEC Staff issued guidance on income tax accounting for the 2017 Tax Act on December 22, 2017, which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. In accordance with this guidance, we recognized a tax benefit of $1,324 million in prior periods due to the re-measurement of certain deferred taxes to the lower U.S. federal tax rate. During the third quarter and first nine months of 2019, we have not made any measurement period adjustments to this amount. We recognized tax expense of $457 million in prior periods for the one-time transition tax on certain accumulated earnings and profits of our foreign subsidiaries resulting from the 2017 Tax Act. During the third quarter and first nine months of 2019, we recognized a discrete tax expense of $10 million and a discrete tax benefit of $5 million in measurement period adjustments to the one-time transition tax on certain accumulated earnings and profits of our foreign subsidiaries. Our accounting for the impact of the 2017 Tax Act has now been completed as of the period ending December 31, 2018. The 2017 Tax Act made broad and complex changes to the U.S. tax code that affect our fiscal year 2019 in multiple ways, including but not limited to reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; creating the base erosion anti-abuse tax; creating a new provision designed to tax global intangible low-tax income (“GILTI”); and generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries. We have estimated the impact of these changes in our income tax provision for the third quarter and first nine months of 2019. The Company is allowed to make an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current period expense when incurred. We have elected to treat the tax effect of GILTI as a current period expense when incurred.

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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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