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INCOME TAXES (Tables) | 12 Months Ended
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Jun. 30, 2023
Income Tax Disclosure [Abstract] |
Provision for income taxes | The provision for income taxes is comprised of the following:
|  | Year Ended June 30
(In millions) |  | 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |  |
Federal |  | $ | 141 |  |  | $ | 219 |  |  | $ | 197 |
Foreign |  | 424 |  |  | 533 |  |  | 479 |
State and local |  | 8 |  |  | 25 |  |  | 10 |
|  | 573 |  |  | 777 |  |  | 686 |
Deferred: |  |  |  |  |  |
Federal |  | (105) |  |  | (12) |  |  | (129) |
Foreign |  | (77) |  |  | (136) |  |  | (100) |
State and local |  | (4) |  |  | (1) |  |  | (1) |
|  | (186) |  |  | (149) |  |  | (230) |
|  | $ | 387 |  |  | $ | 628 |  |  | $ | 456 |
Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings before income taxes | A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual effective tax rate on earnings before income taxes is as follows:
|  | Year Ended June 30
|  | 2023 |  | 2022 |  | 2021
Provision for income taxes at statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) due to: |  |  |  |  |  |
State and local income taxes, net of federal tax benefit |  | 0.3 |  |  | 0.7 |  |  | 0.5 |
Stock-based compensation arrangements – excess tax benefits, net |  | (0.8) |  |  | (2.7) |  |  | (3.0) |
Previously held equity method investment gain - DECIEM(1) |  | — |  |  | — |  |  | (5.3) |
GILTI - High-Tax Exception election (adjustment for prior years) |  | — |  |  | — |  |  | (1.4) |
Taxation of foreign operations |  | 8.6 |  |  | 1.4 |  |  | 1.8 |
Income tax reserve adjustments |  | (0.1) |  |  | 0.3 |  |  | (0.2) |
Nondeductible goodwill impairment charges |  | — |  |  | — |  |  | 0.1 |
Other, net |  | (1.3) |  |  | — |  |  | 0.2 |
Effective tax rate(2) |  | 27.7 | % |  | 20.7 | % |  | 13.7 | %
(1)Included in Other income, net in the accompanying consolidated statements of earnings for the fiscal year ended June 30, 2021. (2)For fiscal 2023, the reconciling items between the Company's U.S. federal statutory income tax rate and the Company's actual effective tax rate were materially impacted by the decrease in earnings before income taxes from fiscal 2022 to fiscal 2023.
Significant components of deferred income tax assets and liabilities | Significant components of the Company’s deferred income tax assets and liabilities were as follows:
|  | June 30
(In millions) |  | 2023 |  | 2022
Deferred tax assets: |  |  |  |
Compensation-related expenses |  | $ | 189 |  |  | $ | 203 |
Inventory obsolescence and other inventory related reserves |  | 75 |  |  | 59 |
Retirement benefit obligations |  | 60 |  |  | 42 |
Various accruals not currently deductible |  | 225 |  |  | 269 |
Net operating loss, credit and other carryforwards |  | 225 |  |  | 192 |
Unrecognized state tax benefits and accrued interest |  | 12 |  |  | 13 |
Lease liabilities |  | 479 |  |  | 504 |
Research-related expenses |  | 200 |  |  | 121 |
Other differences between tax and financial statement values |  | 107 |  |  | 26 |
|  | 1,572 |  |  | 1,429 |
Valuation allowance for deferred tax assets |  | (200) |  |  | (185) |
Total deferred tax assets |  | 1,372 |  |  | 1,244 |
Deferred tax liabilities: |  |  |  |
Fixed assets and intangibles |  | (264) |  |  | (325) |
ROU assets |  | (432) |  |  | (452) |
Partnership interest in DECIEM |  | (404) |  |  | (431) |
Other differences between tax and financial statement values |  | (32) |  |  | (33) |
Total deferred tax liabilities |  | (1,132) |  |  | (1,241) |
Total net deferred tax assets |  | $ | 240 |  |  | $ | 3 |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
|  | June 30
(In millions) |  | 2023 |  | 2022 |  | 2021
Beginning of the year balance of gross unrecognized tax benefits |  | $ | 61 |  |  | $ | 62 |  |  | $ | 70 |
Gross amounts of increases as a result of tax positions taken during a prior period |  | 9 |  |  | 12 |  |  | 9 |
Gross amounts of decreases as a result of tax positions taken during a prior period |  | (5) |  |  | (6) |  |  | (10) |
Gross amounts of increases as a result of tax positions taken during the current period |  | 4 |  |  | 7 |  |  | 8 |
Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities |  | (4) |  |  | (12) |  |  | (13) |
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations |  | (2) |  |  | (2) |  |  | (2) |
End of year balance of gross unrecognized tax benefits |  | $ | 63 |  |  | $ | 61 |  |  | $ | 62 |
Tax years that remain subject to examination vary by the major tax jurisdictions | The tax years subject to examination vary depending on the tax jurisdiction. As of June 30, 2023, the following tax years remain subject to examination by the major tax jurisdictions indicated:
Major Jurisdiction |  | Open Fiscal Years
Belgium |  | 2019 – 2023
Canada |  | 2019 – 2023
China |  | 2020 – 2023
France |  | 2019 – 2023
Germany |  | 2017 – 2023
Hong Kong |  | 2017 – 2023
Italy |  | 2019 – 2023
Japan |  | 2020 – 2023
Korea |  | 2021 - 2023
Spain |  | 2018 – 2023
Switzerland |  | 2020 – 2023
United Kingdom |  | 2022 – 2023
United States |  | 2022 – 2023
State of California |  | 2018 – 2023
State and City of New York |  | 2018 – 2023

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Paragraph 9 -Section 50 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-9 + Details
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- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Paragraph 2 -Section 50 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-2 + Details
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- Definition Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Paragraph 12 -Section 50 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-12 + Details
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- Definition Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-15 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15A -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-15A Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Section 50 -Paragraph 19 -SubTopic 10 -Topic 740 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-19 + Details
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- Definition Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-15 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 55 -Paragraph 217 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482663/740-10-55-217 + Details
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