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Income Taxes
 12 Months Ended
Aug. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Provision for Income Taxes
Income (loss) before income tax expense is summarized below (in millions):
  Fiscal Year Ended August 31,
  2022 2021 2020
Domestic(1)
 $ (116) $ (271) $ (452)
Foreign(1)
 1,347  1,215  713 
Total $ 1,231  $ 944  $ 261 
(1)Includes the elimination of intercompany foreign dividends paid to the U.S.
Income tax expense (benefit) is summarized below (in millions):
  Fiscal Year Ended August 31,
  2022 2021 2020
Current:
Domestic - federal $ 7  $ 7  $ (3)
Domestic - state 2  3  1 
Foreign 239  252  180 
Total current 248  262  178 
Deferred:
Domestic - federal (25) 2  (10)
Foreign
 12  (18) 36 
Total deferred (13) (16) 26 
Total income tax expense $ 235  $ 246  $ 204 
 
Reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is summarized below:
  Fiscal Year Ended August 31,
  2022 2021 2020
U.S. federal statutory income tax rate 21.0  % 21.0  % 21.0  %
State income taxes, net of federal tax benefit 0.7  0.2  (2.6)
Impact of foreign tax rates(1)(2)
 (4.0) (4.6) (0.9)
Permanent differences 1.2  (0.4) 3.2 
Income tax credits(1)
 (0.5) (0.4) (2.5)
Changes in tax rates on deferred tax assets and liabilities(3)
 —  —  10.3 
Valuation allowance(4)
 (3.3) 1.3  16.8 
Equity compensation (0.5) 0.6  2.2 
Impact of intercompany charges and dividends 3.6  4.4  15.0 
Global Intangible Low-Taxed Income 1.1  3.0  13.7 
Other, net (0.2) 0.9  2.0 
Effective income tax rate 19.1  % 26.0  % 78.2  %
(1)The Company has been granted tax incentives for various subsidiaries in China, Malaysia, Singapore and Vietnam, which primarily expire at various dates through fiscal year 2031 and are subject to certain conditions with which the Company expects to comply. These tax incentives resulted in a tax benefit of approximately $80 million ($0.57 per basic weighted average shares outstanding), $51 million ($0.34 per basic weighted average shares outstanding) and $43 million ($0.28 per basic weighted average shares outstanding) during the fiscal years ended August 31, 2022, 2021 and 2020, respectively.
(2)For the fiscal years ended August 31, 2022 and August 31, 2021, the impact of foreign tax rates was primarily related to increased income in low tax rate jurisdictions.
(3)For the fiscal year ended August 31, 2020, the changes in tax rates on deferred tax assets and liabilities was primarily due to the re-measurement of deferred tax assets related to an extension of a non-U.S. tax incentive of $21 million.
(4)For the fiscal year ended August 31, 2022, the valuation allowance change was primarily due to an income tax benefit of $26 million for the reversal of a portion of the U.S. valuation allowance and decreased deferred tax assets with corresponding valuation allowances due to the liquidation of certain non-U.S. subsidiaries. The valuation allowance change for the fiscal years ended August 31, 2021 and 2020 was primarily due to the change in deferred tax assets for sites with existing valuation allowances.
Deferred Tax Assets and Liabilities
Significant components of the deferred tax assets and liabilities are summarized below (in millions):
  August 31, 2022 August 31, 2021
Deferred tax assets:
Net operating loss carryforwards $ 176  $ 200 
Receivables 4  8 
Inventories 16  14 
Compensated absences 13  13 
Accrued expenses 106  115 
Property, plant and equipment 66  71 
Domestic tax credits 11  11 
Foreign jurisdiction tax credits 4  10 
Equity compensation 10  10 
Domestic interest carryforwards 4  4 
Cash flow hedges —  10 
Capital loss carryforwards 20  20 
Revenue recognition 32  36 
Operating and finance lease liabilities 72  60 
Other 27  19 
Total deferred tax assets before valuation allowances 561  601 
Less valuation allowances (281) (353)
Net deferred tax assets $ 280  $ 248 
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries $ 57  $ 60 
Intangible assets 25  27 
Operating lease assets 111  92 
Other 10  4 
Total deferred tax liabilities $ 203  $ 183 
Net deferred tax assets $ 77  $ 65 
Based on the Company’s historical operating income, projection of future taxable income, scheduled reversal of taxable temporary differences, and tax planning strategies, management believes it is more likely than not that the Company will realize the benefit of its deferred tax assets, net of valuation allowances recorded. The net decrease in valuation allowances for the fiscal year ended August 31, 2022 is primarily due to the reversal of a portion of the U.S. valuation allowance and the change in deferred tax assets for sites with existing valuation allowances. The Company’s assessment that led to the partial release of the U.S. valuation allowance considered all available positive and negative evidence including, among other evidence, the impact of historical operating results and the impact of projected future taxable income upon application of the incremental cash tax savings approach for GILTI.
As of August 31, 2022, the Company intends to indefinitely reinvest the remaining earnings from its foreign subsidiaries for which a deferred tax liability has not already been recorded. The accumulated earnings are the most significant component of the basis difference which is indefinitely reinvested. As of August 31, 2022, the indefinitely reinvested earnings in foreign subsidiaries upon which taxes had not been provided were approximately $2.9 billion. The estimated amount of the unrecognized deferred tax liability on these reinvested earnings was approximately $0.2 billion.
Tax Carryforwards
The amount and expiration dates of income tax net operating loss carryforwards, tax credit carryforwards, and tax capital loss carryforwards, which are available to reduce future taxes, if any, as of August 31, 2022 are as follows (in millions):
Last Fiscal Year of Expiration Amount
Income tax net operating loss carryforwards:(1)
Domestic - federal 2038 or indefinite $ 13 
Domestic - state 2042 or indefinite $ 54 
Foreign 2037 or indefinite $ 567 
Tax credit carryforwards:(1)
Domestic - federal 2032 $ 7 
Domestic - state 2027 or indefinite $ 4 
Foreign(2)
 Indefinite $ 4 
Tax capital loss carryforwards:(3)
Domestic - federal 2026 $ 76 
(1)Net of unrecognized tax benefits.
(2)Calculated based on the deferral method and includes foreign investment tax credits.
(3)The tax capital loss carryforwards were primarily from an impairment of an investment that was deemed worthless for tax purposes.
Unrecognized Tax Benefits
Reconciliation of the unrecognized tax benefits is summarized below (in millions):
  Fiscal Year Ended August 31,
  2022 2021 2020
Beginning balance $ 241  $ 190  $ 164 
Additions for tax positions of prior years 22  15  10 
Reductions for tax positions of prior years (21) (3) (9)
Additions for tax positions related to current year(1)
 36  36  27 
Cash settlements (3) —  (1)
Reductions from lapses in statutes of limitations (3) (2) (1)
Reductions from non-cash settlements with taxing authorities (9) —  (2)
Foreign exchange rate adjustment (10) 5  2 
Ending balance $ 253  $ 241  $ 190 
Unrecognized tax benefits that would affect the effective tax rate (if recognized)
 $ 150  $ 139  $ 109 
(1)The additions for the fiscal years ended August 31, 2022, 2021 and 2020 are primarily related to taxation of certain intercompany transactions.
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company’s accrued interest and penalties were approximately $30 million as of August 31, 2022 and 2021. The Company recognized interest and penalties of approximately $0 million, $7 million and $4 million during the fiscal years ended August 31, 2022, 2021 and 2020, respectively.
It is reasonably possible that the August 31, 2022 unrecognized tax benefits could decrease during the next 12 months by $18 million, primarily related to taxing authority agreements associated with intercompany transactions.
The Company is no longer subject to U.S. federal tax examinations for fiscal years before August 31, 2018. In major non-U.S. and state jurisdictions, the Company is no longer subject to income tax examinations for fiscal years before August 31, 2012 and August 31, 2009, respectively.