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Income Taxes | 12 Months Ended
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Oct. 01, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Detail of the provision for income taxes from continuing operations consists of the following:
|  |  |  |  | in millions |
| 2016 |  |  | 2015 |  |  | 2014 |
Federal | $ | 710 |  |  | $ | 564 |  |  | $ | 325 |
State | 118 |  |  | 89 |  |  | 67 |
Foreign | (2 | ) |  | 44 |  |  | 4 |
| $ | 826 |  |  | $ | 697 |  |  | $ | 396 |
Current | $ | 742 |  |  | $ | 659 |  |  | $ | 501 |
Deferred | 84 |  |  | 38 |  |  | (105 | )
| $ | 826 |  |  | $ | 697 |  |  | $ | 396 |
The reasons for the difference between the statutory federal income tax rate and our effective income tax rate from continuing operations are as follows:
| 2016 |  |  | 2015 |  |  | 2014 |
Federal income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes | 2.7 |  |  | 3.1 |  |  | 2.8 |
Unrecognized tax benefits, net | (1.7 | ) |  | (1.8 | ) |  | (4.7 | )
Domestic production deduction | (2.6 | ) |  | (3.7 | ) |  | (4.0 | )
Foreign rate differences and valuation allowances | — |  |  | 3.8 |  |  | 2.8 |
Other | (1.6 | ) |  | (0.1 | ) |  | (0.3 | )
| 31.8 | % |  | 36.3 | % |  | 31.6 | %
During fiscal 2016, the domestic production deduction and changes in unrecognized tax benefits decreased tax expense by $68 million and $43 million, respectively, and state tax expense, net of federal tax benefit, was $70 million. During fiscal 2015, the domestic production deduction and changes in unrecognized tax benefits decreased tax expense by $72 million and $34 million, respectively, and state tax expense, net of federal tax benefit, was $59 million. Additionally, foreign rate differences, mostly driven by the China impairment, unfavorably impacted tax expense by $73 million. The sale of the Mexico and Brazil operations and related repatriation of proceeds did not have a significant impact on the effective income tax rate. During fiscal 2014 the domestic production deduction and the decrease in unrecognized tax benefits decreased tax expense by $50 million and $58 million, respectively. Approximately $2,543 million, $1,908 million, and $1,270 million of income from continuing operations before income taxes for fiscal 2016, 2015 and 2014, respectively, were from our operations based in the United States. We recognize deferred income taxes for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The tax effects of major items recorded as deferred tax assets and liabilities as of October 1, 2016, and October 3, 2015, are as follows:
|  |  |  |  |  |  | in millions |
| 2016 |  | 2015
| Deferred Tax |  | Deferred Tax
| Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Property, plant and equipment | $ | — |  |  | $ | 857 |  |  | $ | — |  |  | $ | 783 |
Intangible assets | — |  |  | 1,979 |  |  | — |  |  | 2,000 |
Accrued expenses | 400 |  |  | — |  |  | 439 |  |  | — |
Net operating loss and other carryforwards | 86 |  |  | — |  |  | 97 |  |  | — |
Other | 140 |  |  | 259 |  |  | 122 |  |  | 238 |
| $ | 626 |  |  | $ | 3,095 |  |  | $ | 658 |  |  | $ | 3,021 |
Valuation allowance | $ | (72 | ) |  |  |  | $ | (68 | ) |  |
Net deferred tax liability |  |  | $ | 2,541 |  |  |  |  | $ | 2,431 |
At October 1, 2016, our gross state tax net operating loss carryforwards approximated $845 million and expire in fiscal years 2017 through 2036. Gross foreign net operating loss carryforwards approximated $35 million and expire in fiscal years 2017 through 2022. We also have tax credit carryforwards of approximately $42 million that expire in fiscal years 2017 through 2031. We have accumulated undistributed earnings of foreign subsidiaries aggregating approximately $219 million and $139 million at October 1, 2016, and October 3, 2015, respectively. The accumulated undistributed earnings at October 1, 2016 are expected to be indefinitely reinvested outside of the United States. If those earnings were distributed in the form of dividends or otherwise, we could be subject to federal income taxes (subject to an adjustment for foreign tax credits), state income taxes and withholding taxes payable to the various foreign countries. Due to the uncertainty of the manner in which the undistributed earnings would be brought back to the United States, the tax laws in effect at that time, as well as the availability of the Company to claim foreign tax credits, it is not currently practicable to estimate the tax liability that might be payable on the repatriation of these foreign earnings. The following table summarizes the activity related to our gross unrecognized tax benefits at October 1, 2016, October 3, 2015, and September 27, 2014:
|  |  |  |  | in millions |
| 2016 |  |  | 2015 |  |  | 2014 |
Balance as of the beginning of the year | $ | 306 |  |  | $ | 272 |  |  | $ | 175 |
Increases related to current year tax positions | 35 |  |  | 78 |  |  | 11 |
Increases related to prior year tax positions | 31 |  |  | 11 |  |  | 17 |
Change related to Hillshire Brands balances | — |  |  | — |  |  | 136 |
Reductions related to prior year tax positions | (48 | ) |  | (18 | ) |  | (20 | )
Reductions related to settlements | (7 | ) |  | — |  |  | (1 | )
Reductions related to expirations of statutes of limitations | (12 | ) |  | (37 | ) |  | (46 | )
Balance as of the end of the year | $ | 305 |  |  | $ | 306 |  |  | $ | 272 |
The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $205 million and $244 million at October 1, 2016, and October 3, 2015, respectively. We classify interest and penalties on unrecognized tax benefits as income tax expense. At October 1, 2016, and October 3, 2015, before tax benefits, we had $52 million and $46 million, respectively, of accrued interest and penalties on unrecognized tax benefits. As of October 1, 2016, we are subject to income tax examinations for United States federal income taxes for fiscal years 2013 through 2015. We are also subject to income tax examinations by major state and foreign jurisdictions for fiscal years 2005 through 2015 and 2002 through 2015, respectively. We estimate that during the next twelve months it is reasonably possible that unrecognized tax benefits could decrease by as much as $10 million primarily due to expiration of statutes in various jurisdictions.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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