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INCOME TAXES | 3 Months Ended
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Aug. 25, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | 11. INCOME TAXES Income tax expense for the first quarter of fiscal 2020 and 2019 was a benefit of $11.5 million and expense of $57.4 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was (7.0)% and 24.4% for the first quarter of fiscal 2020 and 2019, respectively. The effective tax rate in the first quarter of fiscal 2020 reflects the following:
| • | additional tax expense associated with non-deductible goodwill related to assets held for sale, for which an impairment charge was recognized,
| • | a tax benefit resulting from state law changes,
| • | a benefit from the settlement of tax issues that were previously reserved,
| • | an additional benefit due to a change in the deferred state tax rates relating to the integration of Pinnacle activity for tax purposes, and
| • | an income tax benefit associated with a tax planning strategy that will allow us to utilize certain state tax attributes.
The effective tax rate in the first quarter of fiscal 2019 reflects the following:
| • | the impact of the Tax Cuts and Jobs Act of 2017, including a reduction in the statutory federal income tax rate to 21%, partially offset by the repeal of the deduction for domestic manufacturing activities, changes in deductibility of executive compensation and the effect of the global intangible low-tax income inclusion,
| • | the impact of foreign restructuring resulting in a benefit related to undistributed foreign earnings for which the indefinite reinvestment assertion is no longer made,
| • | additional tax expense on the repatriation of certain foreign earnings,
| • | additional tax expense on non-deductible facilitative costs associated with the planned acquisition of Pinnacle, and
| • | an income tax benefit allowed upon the vesting/exercise of employee stock compensation awards by our employees, beyond that which is attributable to the original fair value of the awards upon the date of grant.
The amount of gross unrecognized tax benefits for uncertain tax positions was $39.6 million as of August 25, 2019 and $44.1 million as of May 26, 2019. Included in those amounts was $1.0 million for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The gross unrecognized tax benefits excluded related liabilities for gross interest and penalties of $7.3 million and $11.7 million as of August 25, 2019 and May 26, 2019, respectively. The net amount of unrecognized tax benefits at August 25, 2019 and May 26, 2019 that, if recognized, would impact the Company's effective tax rate was $33.8 million and $37.3 million, respectively. Included in those amounts is $6.7 million that would be reported in discontinued operations. Recognition of these tax benefits would have a favorable impact on the Company's effective tax rate. We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $15.9 million over the next twelve months due to various federal, state, and foreign audit settlements and the expiration of statutes of limitations. As of August 25, 2019 and May 26, 2019, we had a deferred tax asset of $688.9 million and $687.1 million, respectively, that was generated from the capital loss realized on the sale of the Private Brands operations with corresponding valuation allowances of $688.9 million and $687.1 million, respectively, to reflect the uncertainty regarding the ultimate realization of the tax asset. We have not provided any deferred taxes on undistributed earnings of our foreign subsidiaries. Deferred taxes will be provided for earnings of non-U.S. affiliates and associated companies when we determine that such earnings are no longer indefinitely reinvested and will result in a tax liability upon distribution.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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