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Income Taxes | 6 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 8. Income Taxes Fluctuations in our provision for income taxes as a percentage of pre-tax earnings (“effective tax rate”) are due to changes in international and U.S. state effective tax rates resulting from our business mix and discrete items. Effective Tax Rate During the three and six months ended December 31, 2024, the effective tax rate was 21.4 percent and 22.2 percent, respectively. During the three and six months ended December 31, 2023, the effective tax rate was 27.9 percent and 23.4 percent, respectively, and reflects the impact of the tax effect of the goodwill impairment charges recognized during the six months ended December 31, 2023. Tax Effects of Goodwill Impairment Charges During the six months ended December 31, 2023, we recognized pre-tax goodwill impairment charges of $585 million. The net tax benefit related to these charges was $45 million for fiscal 2024. Unless an item is considered discrete because it is unusual or infrequent, the tax impact of the item is included in our estimated annual effective tax rate. When items are recognized through our estimated annual effective tax rate, we apply our estimated annual effective tax rate to the earnings before income taxes for the year-to-date period to compute our impact from income taxes for the current quarter and year-to-date period. The tax impacts of discrete items are recognized in their entirety in the period in which they occur. The tax effect of the goodwill impairment charges during the six months ended December 31, 2023 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we recorded goodwill impairments in prior fiscal years. The impact of the non-deductible goodwill increased the estimated annual effective tax rate for fiscal 2024. Applying the higher tax rate to the pre-tax income for the six months ended December 31, 2023 resulted in recognizing an incremental interim tax benefit of approximately $66 million, which impacted the provision for income taxes in the condensed consolidated statements of earnings during the six months ended December 31, 2023 and prepaid expenses and other assets in the condensed consolidated balance sheet at December 31, 2023. The incremental interim tax benefit reversed in the remainder of fiscal 2024. Unrecognized Tax Benefits We had $924 million and $981 million of unrecognized tax benefits, at December 31, 2024 and June 30, 2024, respectively. The December 31, 2024 and June 30, 2024 balances include $860 million and $882 million of unrecognized tax benefits, respectively, that if recognized, would have an impact on the effective tax rate. At December 31, 2024 and June 30, 2024, we had $74 million and $65 million, respectively, accrued for the payment of interest and penalties related to unrecognized tax benefits, which we recognize in the benefit from income taxes in the condensed consolidated statements of earnings. These balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets. It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the U.S. Internal Revenue Service ("IRS") or other taxing authorities, possible settlement of IRS and other audit issues, reassessment of existing unrecognized tax benefits or the expiration of statutes of limitations. We estimate that the range of the possible change in unrecognized tax benefits within the next 12 months is between zero and a net decrease of up to $20 million, exclusive of penalties and interest. Other Tax Matters We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. With few exceptions, we are subject to audit by taxing authorities for fiscal years 2015 through the current fiscal year.

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