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Taxes on Earnings | 6 Months Ended
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Apr. 30, 2025
Income Tax Disclosure [Abstract] |
Taxes on Earnings | Taxes on Earnings Provision for Taxes For the three months ended April 30, 2025 and 2024, the Company recorded income tax expense of $5 million and $131 million, respectively, which reflects an effective tax rate of (0.5)% and 29.4%, respectively. For the six months ended April 30, 2025 and 2024, the Company recorded income tax expense of $111 million and $227 million, respectively, which reflects an effective tax rate of (35.6)% and 24.5%, respectively. For the three and six months ended April 30, 2025, the effective tax rate generally differs from the U.S. federal statutory rate of 21% due to favorable tax rates associated with certain earnings from the Company’s operations in lower tax jurisdictions throughout the world and the effects of the non-deductible goodwill impairment. For the three and six months ended April 30, 2024, the effective tax rate differs from the U.S. federal statutory rate of 21% due to the geographic mix of forecasted earnings and net unfavorable permanent differences from U.S. income tax on non-U.S. earnings. For the three and six months ended April 30, 2025, the Company recorded $94 million and $111 million of net income tax benefits, respectively, related to various items discrete to the period. For the three months ended April 30, 2025, this amount primarily included $33 million of net income tax benefits related to the cost reduction program, $33 million of net income tax benefits related to the favorable resolution of non-U.S. tax litigation matters, and $16 million of net income tax benefits related to the settlement of U.S. tax audit matters. For the six months ended April 30, 2025, this amount primarily included $33 million of net income tax benefits related to the cost reduction program, $33 million of net income tax benefits related to the favorable resolution of non-U.S. tax litigation matters, $31 million of net excess tax benefits related to stock-based compensation, $16 million of net income tax benefits related to the settlement of U.S. tax audit matters, and $14 million of net income tax benefits related to acquisition, disposition and other charges, partially offset by $22 million of net income tax charges resulting from the gain on the Communications Technology Group (“CTG”) divestiture. For the three and six months ended April 30, 2024, the Company recorded immaterial net income tax benefits related to various items discrete to the period. Uncertain Tax Positions As of April 30, 2025 and October 31, 2024, the amount of unrecognized tax benefits was $365 million and $724 million, respectively, of which up to $265 million and $344 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods. During the second quarter of fiscal 2025, the Company effectively settled with the U.S. Internal Revenue Service ("IRS") regarding its audit of the Company’s fiscal 2017 through 2019 U.S. federal income tax returns, resulting in a reduction in the Company's unrecognized tax benefits of approximately $340 million; however, the effective settlement did not result in a material impact to the Company’s Condensed Consolidated Statement of Earnings and Condensed Consolidated Balance Sheet. The resolution of the audit resulted in the release of tax reserves that were predominantly related either to adjustments to foreign tax credits that carried a full valuation allowance or to the timing of intercompany royalty revenue recognition, neither of which affected the Company’s effective tax rate. For tax liabilities pertaining to unrecognized tax benefits, the Company recognizes interest income from favorable settlements and interest expense and penalties in Provision for taxes in the Condensed Consolidated Statements of Earnings. The Company recognized $19 million of interest income and $1 million of interest expense for the six months ended April 30, 2025 and 2024, respectively. The increase in interest income resulted from the favorable resolution of non-U.S. tax litigation matters. As of April 30, 2025 and October 31, 2024, the Company had accrued $39 million and $58 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets. The Company engages in continuous discussion and negotiation with tax authorities regarding tax matters in various jurisdictions. The Company is no longer subject to U.S. federal tax audits for years prior to 2020. The IRS is conducting audits of the Company's fiscal 2020 through 2022 U.S. federal income tax returns. The Company does not expect complete resolution of any IRS audit cycle within the next 12 months. With respect to major state and foreign tax jurisdictions, the Company is no longer subject to tax authority examinations for years prior to 2005. It is reasonably possible that certain foreign tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions and other matters. The Company believes it is reasonably possible that its existing unrecognized tax benefits for these matters may be reduced by an amount up to $5 million within the next 12 months. Deferred Tax Assets and Liabilities Deferred tax assets and liabilities included in the Condensed Consolidated Balance Sheets were as follows:
| As of
| April 30, 2025 |  | October 31, 2024
| In millions
Deferred tax assets | $ | 2,498 |  |  | $ | 2,396 |
Deferred tax liabilities | (390) |  |  | (373) |
Deferred tax assets net of deferred tax liabilities | $ | 2,108 |  |  | $ | 2,023 |

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