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Income Taxes (Tables) | 12 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Abstract] |
Schedule of income from continuing operations before income taxes |
| Years Ended March 31,
(In millions) | 2020 |  | 2019 |  | 2018
Income from continuing operations before income taxes |  |  |  |  |
U.S. | $ | 216 |  |  | $ | 1,512 |  |  | $ | 1,175 |
Foreign | 928 |  |  | (902 | ) |  | (936 | )
Total income from continuing operations before income taxes | $ | 1,144 |  |  | $ | 610 |  |  | $ | 239 |
Schedule of income tax expense (benefit) related to continuing operations | Income tax expense (benefit) related to continuing operations consists of the following:
| Years Ended March 31,
(In millions) | 2020 |  | 2019 |  | 2018
Current |  |  |  |  |
Federal | $ | 170 |  |  | $ | (20 | ) |  | $ | 577 |
State | 48 |  |  | 35 |  |  | 33 |
Foreign | 142 |  |  | 152 |  |  | 205 |
Total current | 360 |  |  | 167 |  |  | 815 |
Deferred |  |  |  |  |
Federal | (204 | ) |  | 223 |  |  | (767 | )
State | (105 | ) |  | 44 |  |  | 17 |
Foreign | (33 | ) |  | (78 | ) |  | (118 | )
Total deferred | (342 | ) |  | 189 |  |  | (868 | )
Income tax expense (benefit) | $ | 18 |  |  | $ | 356 |  |  | $ | (53 | )
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 21% for 2020 and 2019 and 31.6% for 2018 to income before income taxes is as follows:
| Years Ended March 31,
(In millions) | 2020 |  | 2019 |  | 2018
Income tax expense at federal statutory rate | $ | 240 |  |  | $ | 128 |  |  | $ | 75 |
State income taxes, net of federal tax benefit | (41 | ) |  | 70 |  |  | 50 |
Tax effect of foreign operations | (81 | ) |  | (86 | ) |  | (146 | )
Unrecognized tax benefits and settlements | (7 | ) |  | 20 |  |  | 454 |
Non-deductible goodwill | 7 |  |  | 357 |  |  | 585 |
Share-based compensation | 2 |  |  | 4 |  |  | (8 | )
Net tax benefit on intellectual property transfer | — |  |  | (42 | ) |  | (178 | )
Tax-free gain on investment exit (1) | (87 | ) |  | — |  |  | — |
Impact of change in U.S. tax rate on temporary differences | — |  |  | (81 | ) |  | (1,324 | )
Transition tax on foreign earnings | — |  |  | (5 | ) |  | 457 |
Capital loss carryback | (19 | ) |  | — |  |  | — |
Other, net (2) | 4 |  |  | (9 | ) |  | (18 | )
Income tax expense (benefit) | $ | 18 |  |  | $ | 356 |  |  | $ | (53 | )
(1) | Refer to Financial Note 2, “Investment in Change Healthcare Joint Venture,” for additional information regarding the separation of the Change Healthcare JV.
(2) The Company’s effective tax rates were impacted by other favorable U.S. federal permanent differences including research and development credits of $7 million, $7 million and $11 million in 2020, 2019 and 2018.
Schedule of deferred tax balances | Deferred tax balances consisted of the following:
| March 31,
(In millions) | 2020 |  | 2019
Assets |  |  |
Receivable allowances | $ | 72 |  |  | $ | 70 |
Compensation and benefit related accruals | 331 |  |  | 377 |
Net operating loss and credit carryforwards | 828 |  |  | 885 |
Lease obligations | 482 |  |  | — |
Other | 109 |  |  | 216 |
Subtotal | 1,822 |  |  | 1,548 |
Less: valuation allowance | (833 | ) |  | (870 | )
Total assets | 989 |  |  | 678 |
Liabilities |  |  |
Inventory valuation and other assets | (1,947 | ) |  | (2,016 | )
Fixed assets and systems development costs | (202 | ) |  | (170 | )
Intangibles | (531 | ) |  | (513 | )
Change Healthcare equity investment | — |  |  | (885 | )
Lease right-of-use assets | (449 | ) |  | — |
Other | (56 | ) |  | (34 | )
Total liabilities | (3,185 | ) |  | (3,618 | )
Net deferred tax liability | $ | (2,196 | ) |  | $ | (2,940 | )
Long-term deferred tax asset | $ | 59 |  |  | $ | 58 |
Long-term deferred tax liability | (2,255 | ) |  | (2,998 | )
Net deferred tax liability | $ | (2,196 | ) |  | $ | (2,940 | )
Schedule of gross unrecognized tax benefits | The following table summarizes the activity related to the Company’s gross unrecognized tax benefits for the last three years:
| Years Ended March 31,
(In millions) | 2020 |  | 2019 |  | 2018
Unrecognized tax benefits at beginning of period | $ | 1,052 |  |  | $ | 1,183 |  |  | $ | 486 |
Additions based on tax positions related to prior years | 20 |  |  | 78 |  |  | 47 |
Reductions based on tax positions related to prior years | (168 | ) |  | (234 | ) |  | (124 | )
Additions based on tax positions related to current year | 82 |  |  | 68 |  |  | 778 |
Reductions based on settlements | (8 | ) |  | (13 | ) |  | (7 | )
Reductions based on the lapse of the applicable statutes of limitations | (13 | ) |  | (25 | ) |  | — |
Exchange rate fluctuations | (7 | ) |  | (5 | ) |  | 3 |
Unrecognized tax benefits at end of period | $ | 958 |  |  | $ | 1,052 |  |  | $ | 1,183 |

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