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INCOME TAXES
 12 Months Ended
Oct. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The domestic and foreign components of income before taxes are:

 Years Ended October 31,
 202220212020
 (in millions)
U.S. operations$858 $876 $54 
Non-U.S. operations646 484 788 
Total income before taxes$1,504 $1,360 $842 
The provision for income taxes is comprised of:

 Years Ended October 31,
 202220212020
 (in millions)
U.S. federal taxes:   
Current$173 $122 $5 
Deferred(28)(1)4 
Non-U.S. taxes:   
Current47 (3)84 
Deferred35 14 24 
State taxes, net of federal benefit:   
Current22 17 5 
Deferred1 1 1 
Total provision for income taxes$250 $150 $123 


The differences between the U.S. federal statutory income tax rate and our effective tax rate are:

 Years Ended October 31,
 202220212020
 (in millions)
Profit before tax times statutory rate$316 $286 $177 
State income taxes, net of federal benefit23 18 6 
Non-U.S. income taxed at different rates(18)5 (37)
Change in unrecognized tax benefits(6)(84)(8)
Foreign-derived intangible income deduction(46)(35)(9)
Excess tax benefits from stock-based compensation(19)(29)(18)
Other, net— (11)12 
Provision (benefit) for income taxes$250 $150 $123 
Effective tax rate16.6 %11.0 %14.6 %

For 2022, our income tax expense was $250 million with an effective tax rate of 16.6 percent. For the year ended October 31, 2022, our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of $46 million related to foreign-derived intangible income.

For 2021, our income tax expense was $150 million with an effective tax rate of 11 percent. For the year ended October 31, 2021, our effective tax rate and the resulting provision for income taxes were impacted by the discrete benefit of $93 million related to the release of tax reserves in various jurisdictions due to audit settlements and the expiration of statutes of limitations. The income taxes for the year ended October 31, 2021 also include the excess tax benefits from stock-based compensation of $29 million.

For 2020, our income tax expense was $123 million with an effective tax rate of 14.6 percent. For the year ended October 31, 2020, our effective tax rate and the resulting provision for income taxes were impacted by foreign income taxed at lower rates.

We have negotiated a tax holiday in Singapore. The tax holiday provides a lower rate of taxation on certain classes of income and requires various thresholds of investments and employment or specific types of income. In December 2018, the tax holiday in Singapore was renegotiated and extended through 2027. As a result of the incentive, the impact of the tax holiday decreased income taxes by $53 million, $35 million, and $71 million in 2022, 2021, and 2020, respectively. The benefit of the tax holiday on net income per share (diluted) was approximately $0.18, $0.11, and $0.23 in 2022, 2021 and 2020, respectively.
The significant components of deferred tax assets and deferred tax liabilities included on the consolidated balance sheet are:

 Years Ended October 31,
 20222021
 (in millions)
Deferred Tax Assets
Intangibles$62 $72 
Employee benefits, other than retirement45 43 
Net operating loss, capital loss, and credit carryforwards157 191 
Share-based compensation23 22 
Lease obligations29 30 
Other58 42 
Deferred tax assets$374 $400 
Tax valuation allowance(115)(120)
Deferred tax assets, net of valuation allowance$259 $280 
Deferred Tax Liabilities
Property, plant and equipment$(11)$(11)
Pension benefits and retiree medical benefits(24)(8)
Right-of-use asset(29)(29)
Other(7)(26)
Deferred tax liabilities$(71)$(74)
Net deferred tax assets (liabilities)$188 $206 

Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction by jurisdiction basis. As of October 31, 2022, we continued to maintain a valuation allowance of $115 million until sufficient positive evidence exists to support reversal. The valuation allowance is primarily related to deferred tax assets for the states of California and Colorado, along with the net operating losses in the Netherlands and capital losses in Australia.

At October 31, 2022, we had federal, state and foreign net operating loss carryforwards of approximately $6 million, $207 million and $384 million, respectively. The federal and state net operating loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code and applicable state tax laws. If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2023. If not utilized, $3 million of the foreign net operating loss carryforwards will begin to expire in 2023. The remaining $381 million of the foreign net operating losses carry forward indefinitely. At October 31, 2022, we had foreign capital loss carryforwards of $108 million. The foreign capital losses carry forward indefinitely. At October 31, 2022, we had state tax credit carryforwards of approximately $87 million. The state tax credits carry forward indefinitely.

The breakdown between long-term deferred tax assets and deferred tax liabilities was as follows:

 October 31,
 20222021
 (in millions)
Long-term deferred tax assets (included within other assets)$246 $309 
Long-term deferred tax liabilities (included within other long-term liabilities)(58)(103)
Total$188 $206 
The breakdown between current and long-term income tax assets and liabilities, excluding deferred tax assets and liabilities, was as follows:
October 31,
20222021
(in millions)
Current income tax assets (included within other current assets)$87 $66 
Long-term income tax assets (included within other assets)11 6 
Current income tax liabilities (included within other accrued liabilities)(51)(47)
Long-term income tax liabilities (included within other long-term liabilities)(216)(241)
Total$(169)$(216)

Uncertain Tax Positions

The aggregate changes in the balances of our gross unrecognized tax benefits including all federal, state and foreign tax jurisdictions are as follows:

202220212020
 (in millions)
Balance, beginning of year$133 $195 $206 
Additions for tax positions related to the current year5 6 6 
Additions for tax positions from prior years— 4 — 
Reductions for tax positions from prior years(9)— — 
Settlements with taxing authorities— (30)— 
Statute of limitations expirations(6)(42)(17)
Balance, end of year$123 $133 $195 

As of October 31, 2022, we had $144 million of unrecognized tax benefits, including interest and penalties of which $121 million, if recognized, would affect our effective tax rate. However, approximately $23 million of the unrecognized tax benefits were related to state income tax positions that, if recognized, would be in the form of a deferred tax asset that would likely not affect our effective tax rate due to a valuation allowance.

We recognized tax benefit of $2 million in 2022, tax benefit of $19 million in 2021, and tax expense of $8 million in 2020, for interest and penalties related to unrecognized tax benefits. Interest and penalties accrued as of October 31, 2022 and 2021 were $21 million and $26 million, respectively.

In the U.S., tax years remain open back to the year 2018 for federal income tax purposes and for significant states. In other major jurisdictions where we conduct business, the tax years generally remain open back to the year 2012.

With these jurisdictions and the U.S., it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitation or a tax audit settlement which will be partially offset by an anticipated tax liability related to unremitted foreign earnings, where applicable. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, management is unable to estimate the range of possible changes to the balance of our unrecognized tax benefits.