XML 23 R14.htm IDEA: XBRL DOCUMENT v3.24.2.u1
INCOME TAXES
 12 Months Ended
Oct. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The domestic and foreign components of income before taxes are:

 Years Ended October 31,
 202320222021
 (in millions)
U.S. operations$614 $858 $876 
Non-U.S. operations725 646 484 
Total income before taxes$1,339 $1,504 $1,360 
The provision for income taxes is comprised of:

 Years Ended October 31,
 202320222021
 (in millions)
U.S. federal taxes:   
Current$117 $173 $122 
Deferred(84)(28)(1)
Non-U.S. taxes:   
Current26 47 (3)
Deferred38 35 14 
State taxes, net of federal benefit:   
Current12 22 17 
Deferred(10)1 1 
Total provision for income taxes$99 $250 $150 


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

 Years Ended October 31,
 202320222021
 (in millions)
Profit before tax times statutory rate$281 $316 $286 
State income taxes, net of federal benefit2 23 18 
Non-U.S. income taxed at different rates20 (18)5 
Change in unrecognized tax benefits(35)(6)(84)
Foreign-derived intangible income deduction(41)(46)(35)
Realized loss on divestiture of business(104)— — 
Excess tax benefits from stock-based compensation(14)(19)(29)
Other, net(10)— (11)
Provision (benefit) for income taxes$99 $250 $150 
Effective tax rate7.4 %16.6 %11.0 %

For 2023, our income tax expense was $99 million with an effective tax rate of 7.4 percent. For the year ended October 31, 2023, our effective tax rate and the resulting provision for income taxes were impacted by the federal tax benefit of $104 million related to the realized loss on the divestiture of a business. The income taxes for the year ended October 31, 2023, also include the tax benefit of $41 million related to foreign-derived intangible income along with the tax benefit of $30 million related to the release of tax reserves in the U.S. due to the settlement of the audit with the Internal Revenue Service ("IRS") for tax years 2018 and 2019.

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.

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. The tax holiday in Singapore was renegotiated and extended through 2030. As a result of the incentive, the impact of the tax holiday decreased income taxes by $54 million, $53 million, and $35 million in 2023, 2022, and 2021, respectively. The benefit of the tax holiday on net income per share (diluted) was approximately $0.18, $0.18, and $0.11 in 2023, 2022 and 2021, respectively.
The significant components of deferred tax assets and deferred tax liabilities included on the consolidated balance sheet are:

 Years Ended October 31,
 20232022
 (in millions)
Deferred Tax Assets
Intangibles$102 $62 
Employee benefits, other than retirement36 45 
Net operating loss, capital loss, and credit carryforwards152 157 
Share-based compensation24 23 
Capitalized R&D41 — 
Lease obligations37 29 
Other58 58 
Deferred tax assets$450 $374 
Tax valuation allowance(112)(115)
Deferred tax assets, net of valuation allowance$338 $259 
Deferred Tax Liabilities
Property, plant and equipment$(26)$(11)
Pension benefits and retiree medical benefits(25)(24)
Right-of-use asset(37)(29)
Other(4)(7)
Deferred tax liabilities$(92)$(71)
Net deferred tax assets (liabilities)$246 $188 

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, 2023, we continued to maintain a valuation allowance of $112 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, 2023, we had federal, state and foreign net operating loss carryforwards of approximately $13 million, $90 million and $248 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 2024. If not utilized, $2 million of the foreign net operating loss carryforwards will begin to expire in 2024. The remaining $246 million of the foreign net operating losses carry forward indefinitely. At October 31, 2023, we had foreign capital loss carryforwards of $107 million. The foreign capital losses carry forward indefinitely. At October 31, 2023, we had state tax credit carryforwards of approximately $88 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,
 20232022
 (in millions)
Long-term deferred tax assets (included within other assets)$284 $246 
Long-term deferred tax liabilities (included within other long-term liabilities)(38)(58)
Total$246 $188 
The breakdown between current and long-term income tax assets and liabilities, excluding deferred tax assets and liabilities, was as follows:
October 31,
20232022
(in millions)
Current income tax assets (included within other current assets)$100 $87 
Long-term income tax assets (included within other assets)3 11 
Current income tax liabilities (included within other accrued liabilities)(73)(51)
Long-term income tax liabilities (included within other long-term liabilities)(162)(216)
Total$(132)$(169)

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:

202320222021
 (in millions)
Balance, beginning of year$123 $133 $195 
Additions for tax positions related to the current year5 5 6 
Additions for tax positions from prior years3 — 4 
Reductions for tax positions from prior years(27)(9)— 
Settlements with taxing authorities— — (30)
Statute of limitations expirations(6)(6)(42)
Balance, end of year$98 $123 $133 

As of October 31, 2023, we had $114 million of unrecognized tax benefits, including interest and penalties of which $68 million, if recognized, would affect our effective tax rate.

We recognized tax benefit of $5 million in 2023, tax benefit of $2 million in 2022, and tax benefit of $19 million in 2021, for interest and penalties related to unrecognized tax benefits. Interest and penalties accrued as of October 31, 2023 and 2022 were $16 million and $21 million, respectively.

In the U.S., tax years remain open back to the year 2020 for federal income tax purposes and 2019 for significant states. On October 30, 2023, we reached an agreement with the IRS for tax years 2018 and 2019. The settlement resulted in the recognition of previously unrecognized tax benefits of $30 million. 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 some tax audits may be completed over the next twelve months. However, management is not able to provide a reasonably reliable estimate of the timing of any other future tax payments or change in unrecognized tax benefits, if any.